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1 – 10 of 438
Book part
Publication date: 24 November 2016

Xiaoyan Luo and Michał K. Lemański

To understand the rationale for foreign direct investment of Chinese electronic companies, their location decisions and entry mode choices

Abstract

Purpose

To understand the rationale for foreign direct investment of Chinese electronic companies, their location decisions and entry mode choices

Methodology/approach

Secondary data on foreign direct investment of the top 100 companies in China’s electronics industry are analysed. The first part covers an exploratory analysis of the industry and the second part presents a comparative longitudinal analysis of three case studies of representative companies: Haier, Huawei, and Lenovo.

Findings

The three key findings are: (1) market-seeking is the primary motivation for foreign direct investment of Chinese companies in the electronics industry, yet the strategic-asset-seeking gains importance as the internationalization of the company advances; (2) foreign investment path normally starts at adjacent foreign markets, but more distant markets are gradually targeted and become more important for the company; (3) wholly owned investments are the preferred market entry modes in the international expansion.

Research limitations/implications

This research is based on secondary data, and more in-depth, interview-based studies are needed to explore the perceptions of decision-makers, and a plethora of contextual factors, which result in specific market entry decisions. As only the 100 largest companies were studied, future research should put under scrutiny also internationalization of smaller firms.

Practical implications

Implications of such findings are discussed in the light of classic internationalization theories as well as the current research on internationalization of companies from emerging/developing countries.

Originality/value

Provides an account of foreign direct investment in a context of a substantial and growing importance for the practice of international business, and identifies an agenda for promising future scholarly inquiries.

Details

The Challenge of Bric Multinationals
Type: Book
ISBN: 978-1-78635-350-4

Keywords

Article
Publication date: 9 March 2012

Joachim Wolf, Till Dunemann and William G. Egelhoff

The current paper seeks to analyze to what degree theories from different fields of social science are able to explain the home‐region orientation of MNCs. This is necessary since…

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Abstract

Purpose

The current paper seeks to analyze to what degree theories from different fields of social science are able to explain the home‐region orientation of MNCs. This is necessary since there has been only a relatively narrow, economics‐oriented explanation for such an orientation.

Design/methodology/approach

The analysis is based on a thorough review of the literature that refers to a MNC's home‐region orientation and on different theories from the social sciences.

Findings

The paper shows that several theories from economics, psychology, and sociology are able to explain an MNC's home‐region orientation.

Research limitations/implications

The paper contributes to the development of a more multi‐faceted explanation of why MNCs generally prefer a home‐region orientation. The paper derives propositions that are consistent with each theory. These propositions can be tested empirically in subsequent research studies.

Originality/value

The paper discusses a number of different theories and streams of research that can be used to conceptually explain and gain insight into the phenomenon of a home‐region orientation for MNCs

Details

Multinational Business Review, vol. 20 no. 1
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 4 March 2019

Diego Quer, Laura Rienda, Rosario Andreu and Si Miao

The conventional wisdom suggests that the lack of prior host country-specific experience and a higher institutional distance deter multinational enterprises (MNEs) from entering a…

Abstract

Purpose

The conventional wisdom suggests that the lack of prior host country-specific experience and a higher institutional distance deter multinational enterprises (MNEs) from entering a foreign country. However, past studies report that Chinese MNEs show an unconventional risk-taking behavior choosing foreign locations, where they have no prior experience or there is an increased institutional distance. Drawing on the institutional theory, the purpose of this paper is to argue that Chinese Government official visits to the host country may act as a risk-reduction device, thus providing an explanation for such an unconventional behavior.

Design/methodology/approach

The authors develop two hypotheses regarding how Chinese Government official visits moderate the impact of host country-specific experience and institutional distance on the location choice of Chinese MNEs. The authors test the hypotheses using a sample of investment location decisions by Chinese MNEs in Latin America.

Findings

The authors find that government official visits mitigate the lack of firm’s prior host country experience. However, only high-level government visits reduce institutional distance.

Originality/value

The authors contribute to the international business literature by analyzing how home country government diplomatic activities may pave the way of host country institutional environment for foreign MNEs from that home country. In addition, the authors provide an additional explanation for the unconventional risk-taking behavior of Chinese MNEs. Finally, the authors also contribute to a better understanding of the decision-making process of emerging-market MNEs entering other emerging economies.

Details

Cross Cultural & Strategic Management, vol. 26 no. 1
Type: Research Article
ISSN: 2059-5794

Keywords

Article
Publication date: 14 September 2020

Cláudia Beatriz Batschauer da Cruz, Dinorá Eliete Floriani and Mohamed Amal

This study aims to advance a sub-national perspective within the OLI Paradigm by analyzing how and to what extent the Eclectic Paradigm can serve as a general model to capture…

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Abstract

Purpose

This study aims to advance a sub-national perspective within the OLI Paradigm by analyzing how and to what extent the Eclectic Paradigm can serve as a general model to capture region-specific aspects of the location determinants of FDI, encompassing institutional effects that extend beyond the quality of institutions.

Design/methodology/approach

The authors conducted a systematic literature review of 41 selected papers published between 1990 and 2019. Using inductive content analysis, they investigated the theoretical choices used to support analyses of the effects of institutional factors on MNEs' location decisions at the sub-national level.

Findings

It was found that, when changing from the national to the sub-national level of analysis, there is no need to change the main assumptions used in the literature, although a different perspective must be adopted. The Eclectic Paradigm permeates most of the studies revised and can serve as a general model to capture the sub-national perspective. It offers a foundation for new perspectives on the dynamics of institutional and political factors and their effects on location strategies and determinants at the sub-national level. Adopting the OLI Paradigm with a sub-national approach could widen the IB literature's prevailing focus on traditional economic factors and institutional quality.

Research limitations/implications

The authors contribute to extant International Business literature Their paper enhances the literature on FDI location determinants by providing a more specific approach to development of a sub-national perspective within the OLI Paradigm, extending the institutional effects to capture more region-specific factors influencing the location of FDI. Study limitations are related to our analytical focus on the location dimension, excluding motives for FDI or firm-level location strategies. Rather than limiting analysis to quantitative studies, future research that includes qualitative studies and also covers the other dimensions of the OLI Paradigm could open additional new research avenues for advancing the sub-national perspective within the field of IB.

Practical implications

The authors’ main findings suggest that MNEs' location strategies should include a sub-national perspective, which means that firms need to assess different levels of the location and understand their interaction with nationwide constraints and limitations, as it may affect firms' ability to effectively conduct their value-adding activities. They also contribute elements that can support sub-national governments' actions and policies aiming to enhance locational advantages to attract and retain FDI.

Originality/value

This review specifically analyzes the location determinants of FDI at the sub-national level, in studies published in a broad set of journals, from a variety of fields, prioritizing articles that investigate sub-national institutional determinants. The authors derive implications for the International Business literature and propose that the sub-national dimension should be incorporated into the Eclectic paradigm in order to better understand the influence of institutional sub-national determinants.

Details

International Journal of Emerging Markets, vol. 17 no. 1
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 11 December 2017

Miguel A. Ramos and Nathan J. Ashby

The purpose of this paper is to develop and test theory regarding a geographic halo effect, whereby foreign investors draw overly broad impressions about a country based on high…

1058

Abstract

Purpose

The purpose of this paper is to develop and test theory regarding a geographic halo effect, whereby foreign investors draw overly broad impressions about a country based on high levels of violent crime in specific locations impacting foreign direct investment (FDI) across the country.

Design/methodology/approach

The authors analyze the impact of homicides on FDI by source country into Mexican states from 2001 to 2015. They estimate fixed effect and dynamic panel models controlling for several determinants of FDI at the state level and the potential geographic spillover of such violence from adjacent states.

Findings

The authors find robust support for the existence of a geographic halo effect caused by violent crime. The results show that the highest number of state homicides is associated with lower FDI across states.

Research limitations/implications

The research provides some evidence of the potential role of cognitive biases on FDI decisions. In addition, its focus on Latin America brings attention to an understudied region in international business research.

Practical implications

For practitioners engaged in FDI decisions, the results imply the need to be more aware of potential cognitive biases that may influence them.

Originality/value

Few papers have explored the influence of cognitive biases on FDI.

Details

Multinational Business Review, vol. 25 no. 4
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 1 July 2006

Rizwan Tahir and Jorma Larimo

To empirically investigate how the location‐specific variables and strategic motives influence the ownership strategies of Finnish manufacturing firms in ten South and Southeast…

2019

Abstract

Purpose

To empirically investigate how the location‐specific variables and strategic motives influence the ownership strategies of Finnish manufacturing firms in ten South and Southeast Asian countries from 1980 to 2000.

Design/methodology/approach

Because of the nature of the dependent and independent variables, the binomial logit model is used in the analysis. The regression coefficient estimates the impact of independent variables on the probability that the wholly owned subsidiary (WOS) is market, efficiency and/or a risk‐reduction seeking type of foreign direct investment (FDI). A positive sign for the coefficient means that the variable increases the probability of choosing WOS and undertaking a certain type of investment.

Findings

The research results indicate that the low cultural distance, large market size, and high levels of economic welfare in the target country increases the probability of choosing WOS in order to undertake market‐seeking and efficiency‐seeking FDIs. Similarly the low level of risks in the target country increases the probability to choose WOS in order to undertake risk‐reduction seeking FDIs.

Research limitations/implications

Due to the lack of information about the absolute and relative size of FDIs and competition related data could not be included in this study. Adding those variables would also be interesting for future research.

Practical implications

This study may also help the different governments to understand the strategic motives of different multinational firms and fine‐tune existing investment policies or criteria to better satisfy some of their motives.

Originality/value

To the best of our knowledge, this is the first study trying to analyze how the location‐specific variables and strategic motives have influenced the ownership strategies of Finnish manufacturing FDIs in Asian countries.

Details

Cross Cultural Management: An International Journal, vol. 13 no. 3
Type: Research Article
ISSN: 1352-7606

Keywords

Article
Publication date: 1 October 2004

Rizwan Tahir and Jorma Larimo

This study, empirically investigates how the ownership‐specific variables, location‐specific variables and strategic motives have influenced the ownership structure choices of

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Abstract

This study, empirically investigates how the ownership‐specific variables, location‐specific variables and strategic motives have influenced the ownership structure choices of Finnish manufacturing firms in ten South and south‐east Asian countries from 1980 to 2000. Very few studies in FDIs have been undertaken so far to empirically analyze the ownership‐specific and location‐specific variables together with the strategic motives in order to understand the ownership structure choices of the investing firms. To the best of our knowledge, this is the first study trying to analyze how the ownership‐specific variables, location‐specific variables, and strategic motives have influenced the ownership structure choices of Finnish manufacturing FDIs in Asian countries. The research results indicate that large international experience, low cultural distance, large market size, and high levels of economic welfare in the target country increases the probability of choosing wholly owned subsidiary (WOS) in order to undertake market‐seeking and efficiency‐seeking FDIs. Similarly, it has also been found that low levels of risks in the target country increases the probability to choose WOS in order to undertake risk‐reduction seeking FDIs.

Details

European Business Review, vol. 16 no. 5
Type: Research Article
ISSN: 0955-534X

Keywords

Article
Publication date: 1 July 2006

Peter Liesch, John Steen, Gary Knight and Michael R. Czinkota

This paper offers a conceptualization of the internationalization decision confronted by a firm in an environment of terrorism‐induced risk.

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Abstract

Purpose

This paper offers a conceptualization of the internationalization decision confronted by a firm in an environment of terrorism‐induced risk.

Design/methodology/approach

The approach taken is a conceptualization of the internationalization decision framed from theoretical reasoning and informed by the literature.

Findings

The model presents the internationalization decision, a product/market/mode (PMM) combination, in the case of a terrorism‐free context and in a with‐terrorism context. Using indifference curve mapping of risk/return tradeoffs, an opportunities set of possible PMM combinations and the notion of efficiency, it traces the most attractive opportunities set to show that within this set, the frontier of attractive opportunities is constrained in the with‐terrorism case. Propositions are framed to guide future research. While conditions of risk can be calculated, it is concluded that remaining uncalculable is the true uncertainty incited by the systemic effects of international terrorism that call for managerial judgment.

Originality/value

The literature in this field reports little on the effects of international terrorism on the firm. With heightened awareness of international terrorism, and the changed environment for the firm operating internationally, it is timely that the effects of terrorism on decision‐making in firms be investigated. Advancing beyond description to substantive conceptualization of this decision is an essential step for better understanding of this now pervasive phenomenon.

Details

Management Decision, vol. 44 no. 6
Type: Research Article
ISSN: 0025-1747

Keywords

Book part
Publication date: 1 January 2006

Jongmoo Jay Choi and Eric C. Tsai

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial…

Abstract

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial factors are also important in corporate FDI decisions. The financial factors concern internal capital market strength and corporate governance and include exchange rate changes, internal and external financing cost, risk diversification, and agency costs. There is variability in the significance of financial variables depending on industries and destinations. The integrated model with both strategic and financial factors is superior to either component model in explaining FDIs. However, financial factors are no less important in explaining the prevailing FDI phenomena than strategic or operational variables.

Details

Value Creation in Multinational Enterprise
Type: Book
ISBN: 978-1-84950-475-1

Article
Publication date: 28 September 2012

Mingming Pan

No previous research has considered the changing agglomeration effect of foreign direct investment (FDI). The purpose of this paper is to fill the gap in the literature.

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Abstract

Purpose

No previous research has considered the changing agglomeration effect of foreign direct investment (FDI). The purpose of this paper is to fill the gap in the literature.

Design/methodology/approach

The paper uses China as the object of study and examines the centripetal and centrifugal forces associated with FDI clustering over time.

Findings

Through studying the FDI determinants for the 29 Chinese provinces from 1993 to 2008, the empirical analysis supports a weakening agglomeration effect of FDI over time in China and further suggests that the effect has nearly vanished in the past few years.

Research limitations/implications

Data availability restricts the analysis to using provincial aggregate data and so further research is called for. It would provide more accurate and insightful information to study the FDI agglomeration effects at a finer level, using more disaggregated city‐level data by sector and by source country.

Originality/value

As the Chinese government has been making efforts to direct FDI to inland areas, this research provides immediate policy implications. Policy‐makers' investment incentives to direct FDI could go to waste when the agglomeration effect of FDI is too strong. The incentives should be able to achieve a much larger effect when the agglomeration effect becomes less strong.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 5 no. 3
Type: Research Article
ISSN: 1754-4408

Keywords

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