Inward FDI and local firms' political connections in emerging markets: Evidence from China
Meitong Dong,
Pengcheng Ma,
Lin Cui
Abstract:Research SummaryResearch on the spillover effects of foreign direct investment (FDI) into emerging markets has primarily focused on local firms' productivity or innovation outcomes while overlooking their nonmarket strategies. Based on the resource dependence theory, we propose that inward FDI has a U‐shaped impact on local firms' political connections. This is because when FDI is at a low to medium level, its spillover benefits substitute for local firms' dependence on government resources. As FDI further inc… Show more
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