Is the Strategic Asset Seeking Investment Proclivity of Chinese MNEs Different to that of Developed Market MNEs? A Comparative Analysis of Location Choice and Orientation

Abstract

2018) 'Is the strategic asset seeking investment proclivity of Chinese MNEs dierent to that of developed market MNEs? A comparative analysis of location choice and orientation. ', Management international review., 58 (6). pp. 911-933.The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details.Abstract: Do emerging market MNEs acquire strategic assets in psychically distant developed markets to augment the firm-specific advantages they lack? This question is central to current conceptual discussion of their FDI strategies. To date, however, empirical testing has focused on emerging market MNE FDI location choices in isolation to indirectly infer facts about strategic asset seeking orientation. There are two weaknesses with this approach. First, comparative analysis with developed market MNEs is limited. Second, the focus on geographical location choices does not account for important direct, firm-level evidence on the strategic assets found in foreign subsidiaries. To address these gaps, we first undertake a comparative location choice study of Chinese MNE and developed market MNE FDI in the US. Second, we test corresponding firmlevel US subsidiary data using logit modelling to explore whether there are differences between Chinese and developed market MNEs. Our results indicate similarities, rather than differences, in the strategic asset seeking behavior of Chinese and developed market MNEs. This calls into question whether theoretical extension is necessary to explain the behavior of emerging market MNEs as well as the value of indirect, location choice approaches to the analysis of strategic asset seeking FDI.

A comparative analysis of location and non-location-bounded strategic asset seeking in emerging and developed market MNEs: An application of new internalization theory

“…If this interpretation is correct, it is worth briefly reflecting on the implications for the many studies that have to date that remarked upon the strong SAS orientation of EMNEs. Among these studies there are actually very few DMNE/EMNE comparisons, with several notable exceptions (Estrin et al, 2018;Jindra et al, 2016;Sutherland, Anderson, & Hertenstein, 2017). Jindra et.…”

Firm-specific advantages: a comprehensive review with a focus on emerging markets

“…Their competitive advantage primarily resided in their generally small size, which gave them the flexibility to adapt products to local market conditions and domestication; thus, they could use local inputs and capital conservation by employing labor-intensive production methods rather than capitalintensive production methods. These EM MNEs exported their product down the "pecking order" to other emerging markets (Wells, 1977(Wells, , 1983, leading scholars to describe EM MNEs as either having no real FSAs at all (Rugman, 2009) Lee et al, 2016a;Liang et al, 2012;Nguyen & Rugman, 2015;Sutherland et al, 2017). However, as noted by Wells (1983) and Lall (1983a) in the late 1960s and early 1970s, possessing the advantage of ownership is not sufficient on its own for EM MNEs to exploit their advantages abroad (Lall, 1983a;Wells, 1983;Yiu, Lau, & Bruton, 2007).…”

From China to the West: why manufacturing locates in developed countries

“…With respect to DE firms, Chinese firms need differentiation and brand advantages to compete in high value-adding markets (Zeng and Williamson 2003). In this direction, Chinese OFDI to DE is driven by the search for intangible strategic resources, such as superior skills, marketing expertise, advanced proprietary technologies and brands (Deng 2012;Buckley et al 2018;Sutherland, Anderson, and Hertenstein 2018), in order to quickly overcome their latecomer disadvantage, strengthen global competitiveness and upgrade value chains (Luo, Xue, and Han 2010;Kedia, Gaffney, and Clampit 2012;Li, Li, and Wang 2016a).…”