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1 – 10 of 518Yang Yang, Xiaohua Yang and Barry W. Doyle
There has been a surge of overseas investment from China, both to developing and developed countries. However, there is limited understanding of the impact the…
Abstract
Purpose
There has been a surge of overseas investment from China, both to developing and developed countries. However, there is limited understanding of the impact the internationalization of these firms has on their value creation. This paper seeks to draw on the reconciled FSA/CSA framework with Dunning's four motives to differentiate two types of FDI: traditional FDI and strategic asset-seeking FDI. Further, the paper draws on Verbeke's FSA/CSA recombination process model to analyze the differentiated value creation of traditional FDI and strategic asset-seeking FDI for the Chinese MNEs.
Design/methodology/approach
The paper adopts event study methodology to measure the value created by Chinese MNE's FDI projects and hierarchical linear regression to test the hypotheses. The sample consists of 121 FDI projects publicly announced by Chinese listed companies during 2001-2009.
Findings
Both traditional and strategic asset-seeking FDI create value and traditional FDI creates more value than strategic asset-seeking FDI for Chinese MNEs. In addition, the paper empirically demonstrates that traditional FDI into developing countries creates more firm value than traditional FDI into developed countries or strategic asset-seeking FDI into developed countries.
Originality/value
This research makes the following original contributions: it contributes to the growing body of literature on internationalization of Chinese firms by investigating whether international expansion creates firm value and how the alignment between types of FDI and location strategies influences firm value creation; the study contributes to the literature by providing insights into the performance implications of emerging economy enterprises (EEEs); and the research contributes to FDI theory building by incorporating learning concepts in internationalization theories and by extending the context of internationalization theories to that of EEEs.
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Faisal Mohammad Ahsan and Ashutosh Kumar Sinha
Recent empirical findings on the relationship between internationalization and firm performance (I–P) suggest a significant role of firm's context. Extending this line of…
Abstract
Purpose
Recent empirical findings on the relationship between internationalization and firm performance (I–P) suggest a significant role of firm's context. Extending this line of argument, the authors study the effect of internationalization on firm's performance for emerging market firms from knowledge-intensive industries, taking into account the firm's motive of internationalization and host country’s location-based advantages.
Design/methodology/approach
The authors link host country-specific advantages (CSAs) with firm-specific advantages (FSAs) to identify three distinct settings of internationalization for emerging economy firms – (1) asset-exploitative internationalization in developing or least developed countries, (2) asset-exploitative internationalization in developed countries and (3) strategic asset-seeking internationalization. The authors test this study’s hypotheses on a sample of 415 Indian firms from knowledge-intensive industries.
Findings
The authors find that firm's performance upon internationalization is non-linear in each of the three different settings. The nature of the non-linear relationship depends upon location-based advantages of the host country and the motive of internationalization.
Originality/value
The motive of internationalization and the location-based advantages sought during internationalization are unique for emerging economy firms. Hence, the study extends understanding of the I–P linkage in an emerging economy context.
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The purpose of this paper is to shed more light on the concept of “strategic asset-seeking FDI”, which is frequently used in discussion of emerging economy multinational…
Abstract
Purpose
The purpose of this paper is to shed more light on the concept of “strategic asset-seeking FDI”, which is frequently used in discussion of emerging economy multinational enterprises (MNEs), but it is challenged by some scholars. The author argues that he needs this category because an important type of foreign direct investment (FDI) is not captured by the other motives identified by John Dunning, namely, market-, efficiency- and natural-resource-seeking FDI.
Design/methodology/approach
The author illustrates the phenomenon of strategic asset-seeking FDI with case examples that form the starting point for his theoretical arguments.
Findings
Some FDI is undertaken explicitly with the aim to use assets acquired abroad to enhance the operations of the investor in other markets, including, notably, the investors’ home market. This contribution to capability-building processes of the MNE, indeed, constitutes an important and distinct type of investment motive.
Originality/value
The author concluded that Dunning’s typology remains a powerful tool to analyze contemporary business strategies, but it suggests refining the definition of the categories.
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Qiuling Gao, Zijie Li and Xinli Huang
Based on the strategy tripod perspective, this study aims to address how emerging economy multinational enterprises (EMNEs) make a strategic decision of choosing a foreign…
Abstract
Purpose
Based on the strategy tripod perspective, this study aims to address how emerging economy multinational enterprises (EMNEs) make a strategic decision of choosing a foreign location for their strategic asset seeking and under what mechanism EMNEs make foreign direct investment (FDI) location choice.
Design/methodology/approach
This paper first reviews the literature on strategy tripod and strategic asset seeking strategy of EMNEs. Then, six cases of Chinese multinational enterprises operating in manufacturing industry have been introduced, emphasizing on interactions within three dimensions of strategy tripod framework, namely, resource-based dimension, industry-based dimension and institution-based dimension. By triangulating with multiple sources of archival and interview data, this paper identified a conceptual model presenting location choice mechanisms.
Findings
Based on a comparative multi-case study, four mechanisms of EMNEs’ location choice when seek strategic asset by FDI within a strategy tripod framework have been revealed. Specifically, EMNEs make their strategic decision of choosing a foreign location for their strategic asset seeking under mechanisms of seeking complementary resources based on industry characteristics; echoing with institutional dimension of home country when exploitation of resource; matching institutional dimension of host country when consider industry fitness; and institutional leveraging combined with understanding of resource and industry dimensions inside strategy tripod.
Originality/value
The findings shed novel insights into the mechanisms under which EMNEs choose their location for strategic asset-seeking FDI. It also broadens the strategy tripod framework by looking deeper into the characteristics of each dimension within a new research context of EMNEs’ FDI location choice.
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This paper aims to explore the contribution of China's largest business groups to China's outward foreign direct investment (OFDI), looking particularly at the question of whether…
Abstract
Purpose
This paper aims to explore the contribution of China's largest business groups to China's outward foreign direct investment (OFDI), looking particularly at the question of whether they contribute to strategic‐asset‐seeking OFDI.
Design/methodology/approach
It uses national‐level data and business group OFDI data to explore the sectors from which OFDI originates and destinations to which it is sent. From this conclusions are drawn as to the types of investments being made.
Findings
In the national context strategic‐asset‐seeking OFDI from China has been rather limited to date. Instead, OFDI expansion still appears more closely linked to China's expansion as a trading nation with a natural resource deficit. Strategic‐asset‐seeking OFDI when it does take place, moreover, is orchestrated to a large extent through large state controlled business groups, as is much other OFDI.
Research limitations/implications
A limitation of this research is the reliance on official data and the assumed simplification that most strategic‐asset‐seeking OFDI is concentrated in the manufacturing industries.
Practical implications
More attention should be paid to the role of these select business groups as they play a significant part in China's OFDI.
Originality/value
There is a growing presumption that much of China's OFDI is strategic‐asset‐seeking in nature and that new theories are required to explain this trend. Many firm‐level studies, however, rely upon just a few high‐profile but unrepresentative cases. This paper redresses this imbalance. It also shows that China's largest trial business groups have played an important role in her OFDI to date.
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Haihan Li, Per Hilletofth, David Eriksson and Wendy Tate
This study aims to investigate the manufacturing reshoring decision-making content from an Eclectic Paradigm perspective.
Abstract
Purpose
This study aims to investigate the manufacturing reshoring decision-making content from an Eclectic Paradigm perspective.
Design/methodology/approach
Data were collected through a six-step systematic literature review on factors influencing manufacturing reshoring decision-making. The review is based on 100 peer-reviewed journal papers discussing reshoring decision-making contents published from 2009 to 2022.
Findings
In total, 80 decision factors were extracted and then categorized into resource-seeking (8%), market-seeking (11%), efficiency-seeking (41%) and strategic asset-seeking (16%) advantages. Additionally, 24% of these were identified as hybrid, which means that they were classified into multiple categories. Some decision factors were further identified as reshoring influencing factors (i.e. drivers, enablers and barriers).
Research limitations/implications
Scholars need to consider what other theories can be used or developed to identify and evaluate the decision factors (determinants) of manufacturing reshoring as well as how currently adopted theory can be further advanced to create clearer and comprehensive theoretical frameworks.
Practical implications
This research underscores the importance of developing clearer and more comprehensive theoretical frameworks. For practitioners, understanding the multifaceted nature of decision factors could enhance strategic decision-making regarding reshoring initiatives.
Originality/value
To the best of the authors’ knowledge, this is the first study to investigate the value and practicality of the Eclectic Paradigm in categorizing factors in manufacturing reshoring decision-making content and presents in-depth theoretical classifications. In addition, it bridges the gap between decision factors and influencing factors in the decision-making content research realm.
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Lili Mi, Yuanfei Kang and Yulong Liu
This paper aims to investigate the relationship between strategic asset-seeking intent and firms’ entry strategies of foreign investment in the context of emerging market firms.
Abstract
Purpose
This paper aims to investigate the relationship between strategic asset-seeking intent and firms’ entry strategies of foreign investment in the context of emerging market firms.
Design/methodology/approach
This study is based on survey data of 392 Chinese foreign direct investment projects. Structural equation modelling is used for data analysis.
Findings
With stronger strategic asset-seeking intent, emerging market multinational enterprises are likely to locate their subsidiaries in developed countries, use a wholly owned subsidiary mode and invest with greater intensity, while they do not have a clear preference in entry timing.
Practical implications
The strategic asset-seeking intent applies not only to emerging market firms but also to small and medium firms in general that have limited resources and a need to catch up with stronger competitors. This study therefore provides guidance to these firms.
Originality/value
This study contributes by investigating how the strategic asset-seeking intent affects firms’ strategies. The findings have practical implications for strategic managerial decisions that lead to sustained competitive advantage and improved firm performance.
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Sathyajit R. Gubbi and Sinan A. Sular
Outward foreign direct investments (FDI) by Turkish firms in the new millennium show intriguing geographic distribution pattern and unlike the predictions of classical theories of…
Abstract
Outward foreign direct investments (FDI) by Turkish firms in the new millennium show intriguing geographic distribution pattern and unlike the predictions of classical theories of FDI. In this study we contribute by linking the observed pattern of outward FDI with Turkish firms’ motivation for investment across national borders. We enrich research by collecting and analyzing FDI motivation data at the firm-level for a very important but less researched developing country: Turkey. Content analysis of text material on the foreign investments made by 211 Turkish firms reveals that Turkish firms primarily perform FDI in European developed countries for reasons other than conventional, namely, market- and strategic-asset-seeking motivations. More importantly, Turkish firms seem to be using the European countries to (1) present themselves as a European Union company, (2) make use of special features of these countries to expand their businesses within and to other countries and, (3) make use of the favorable tax treatment policies available to foreign investors. Surprisingly, our analysis shows that in spite of its small size, the Netherlands is a preferred destination for Turkish FDI over other Western European countries due to its strategic location and favorable investment policies.
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Jason Li‐Ying, Tamara Stucchi, Anne Visholm and Joanna Solvig Jansen
The purpose of this paper is to explain in detail the strategic asset‐seeking OFDIs of Chinese firms in Denmark through a theoretical lens that combines the updated OLI…
Abstract
Purpose
The purpose of this paper is to explain in detail the strategic asset‐seeking OFDIs of Chinese firms in Denmark through a theoretical lens that combines the updated OLI (Ownership, Location, Internalization) paradigm and the internalization theory. Meanwhile, the authors hope to unveil the unique characteristics of firm specific advantages (FSAs, including O and I advantages) and country specific advantages (CSAs, including L advantages).
Design/methodology/approach
The authors chose two case firms that just started investing and a third one that was in the process of preparing investment in Denmark. Primary data were collected by semi‐structured interviews in English at various locations in late 2009 and early 2010. The three Chinese firms in this study share a common primary objective in their strategic orientation of OFDIs. That is to seek strategic assets that are complementary and critical to augment their existing FSAs.
Findings
Rugman stated that strategic asset‐seeking OFDIs are supposed to have high levels of FSAs and CSAs. This study presents a more detailed analysis regarding the O, L and I advantages that Chinese investing firms in Denmark are perceived to possess. It was found that these Chinese investing firms had high levels of Oa and Oi but Ot was largely absent; furthermore, although Lr was obviously appreciated in Denmark, Li presented a mixed picture. The paper also found that internalization advantages were only able to be realized when investing firms were good at utilizing networking and guanxi, which were largely derived from their prior Oi advantages.
Originality/value
Few have analyzed strategic asset‐seeking OFDIs made by emerging markets based on the FSA/CSA matrix that combines the OLI paradigm and the internalization theory. This study pursued this research endeavor by enriching a refined framework that connects the OLI paradigm, which recognizes multiple dimensions of O advantages and an institutional perspective, to the internalization theory, which converts O and I advantages into FSAs and associates L advantages with CSAs.
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Bent Petersen and Rene E. Seifert
The chapter provides an economic explanation and perspectivation of strategic asset seeking of multinational enterprises from emerging economies (EMNEs) as a prominent feature of…
Abstract
Purpose
The chapter provides an economic explanation and perspectivation of strategic asset seeking of multinational enterprises from emerging economies (EMNEs) as a prominent feature of today’s global economy.
Approach
The authors apply and extend the “springboard perspective.” This perspective submits that EMNEs acquire strategic assets in developed markets primarily for use in their home markets.
Findings
The authors succumb that the springboard perspective is alluring theoretically as well as empirically as it suggests that when EMNEs acquire strategic assets, they experience liabilities of foreignness (LOF) that are low relative to those of MNEs from developed markets. The authors concede to this LOF asymmetry but also point out that liabilities of outsidership (LOO) can offset or weaken the home-market advantage of some EMNEs when competing with MNEs.
Research implications
LOO appears as the more relevant concept to use when explaining strategic asset seeking of EMNEs. A set of propositions are formulated to guide empirical testing.
Originality/value
The insights gained from using the springboard perspective and the LOO concept are non-trivial: They basically predict future dominance of ‘insider’ EMNEs at the expense of MNEs from developed markets.
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