Institutional Differences and the Choice of Outward Foreign Direct Investment Mode under the “Belt and Road” Initiative: Experience Analysis Based on China’s Manufacturing Enterprises

Abstract

Based on 1692 outward foreign direct investment (OFDI) events of 735 A-share listed companies in China’s manufacturing industry from 2010 to 2019, this paper empirically examines the effect of investment motivation and the impact of institutional differences between China and the host country on the choice of OFDI entry mode; the paper also investigates the moderating effect of the “Belt and Road” Initiative (BRI) on Chinese manufacturing enterprises (CMEs) through use of the logit model. The empirical results show that, with greater institutional differences, CMEs become more inclined to choose cross-border mergers and acquisitions (M&A). Furthermore, a positive moderating effect of resource-seeking motivation on the choice of M&A OFDI by CMEs is observed. The signing of the “Belt and Road” cooperation document positively moderates institutional differences in promoting CMEs—especially state-owned CMEs—to choose the M&A mode. The “Belt and Road” Initiative provides an efficient supply system for OFDI by CMEs. This study enriches and extends existing institutional theories and provides suggestions for the promotion of the geopolitical pattern and international cooperation regarding the “Belt and Road” Initiative.

A Study Exploring the Belt and Road Initiative and the Impact on the Cultural Differences in Africa Cooperative Countries

“…And in the study of Xue Ye et al (2023), he explored the impact of cultural distance between the home country and the investor on OFDI, and concluded a significant negative correlation between the two business partners he continued to state the smaller the distance between the host country and investors culture in terms of cultural system, adaptation and adjustment of costs for investing firms and the more investing is required. When there is a greater cultural differences between host country and investor the OFDI entry mode of these investment will tend to focus on a joint venture mode (Xie & Yin, 2023); while Minkov, M. ( 2007) argued that the greater the cultural differences, the more investors tend to relay on 2004) suggested that cultural differences negatively moderate the location choice of resource-seeking, positively moderate the location choice of market-seeking, and have no significant effect on the location choice of strategic asset-seeking OFDI. Qunxi Kong et al (2020) declared that cultural differences have no significant effect on the location choice of strategic asset-seeking OFDI.…”