Outward foreign direct investment by emerging market firms: A resource dependence logic

Abstract

AustraliaThis study examines and extends the resource dependence logic of diversification for a better understanding of outward foreign direct investment (OFDI) activities by emerging market firms. We contend that the diversification logic is bounded by state ownership, an important but less considered component of interdependence. Our empirical results, based on panel data analysis of Chinese listed firms, suggest that the level of interdependence between Chinese and foreign firms in China in multiple forms, including symbiotic, competitive, and partner interdependencies, is positively associated with the level of the Chinese firms' OFDI activities. However, Chinese firms with higher levels of state ownership are less susceptible to the pressures imposed by foreign firms to invest abroad.(Numbers in parentheses are robust standard errors, based on a Huber-White sandwich estimator); [marginal effects in square brackets];{standard errors of marginal effects in curly brackets}.

From LLL to IOL3: Moving dragon multinationals research forward

“…However, the impact of inward linkages is downplayed. In this section, we integrate the LLL model with recent research on the role of inwardoutward linkages in emerging market firms' internationalization (Gu & Lu, 2011;Hertenstein, Sutherland, & Anderson, 2017;Sun & Liang, 2014;Xia, Ma, Lu, & Yiu, 2014) into a more comprehensive IOL 3 framework, with a special focus on different forms of inward linkages that can provide these firms with the initial resource base for embarking on IB.…”

“…For example, some scholars developed an Binward-outward linkage^perspective and showed the significant influence of inward foreign investment on outward foreign investment in the contexts of venture capital investments (e.g., Gu & Lu, 2011;Sun & Liang, 2014) and the outward FDI by Chinese firms (e.g., Sun, Peng, Lee, & Tan, 2015;Xia et al, 2014). The core idea is that inward investment can deepen firms' understanding of international markets, helping them accumulate international experience and build unique capabilities that stimulate subsequent outward FDI (Deng, 2009).…”

Seeking legitimacy: Chinese OFDI and domestic isomorphic pressures

“…For our dependent variable (firm-level OFDI), we use the total counts of OFDI projects adopted by a focal Chinese firm in a given year t as the measurement (Xia et al, 2014). To develop this measure, we rely on the "Overseas Foreign Investment Enterprises and Institutions List" compiled by the MOFCOM.…”

“…It provides firms with scarce resources (Wang et al, 2012), including bank loans, subsidiaries, and tax breaks (Luo et al, 2010). In addition, firm-government interdependence provides firms with privileged access to critical industrial information or preferential policy information (Xia et al, 2014). Despite the potential benefits enforced by the government, there are substantial differences among Chinese firms in terms of their resource dependence on the government (Pan et al, 2014).…”

Capacity building at the Asia Pacific Journal of Management

“…Jane is the James Riady Chair Professor at the University of Melbourne and is an accomplished international business scholar. She has done pioneering work on the internationalization and performances of small to medium-sized enterprise (e.g., Lu & Beamish, 2004) and has subsequently produced a steady stream of research in the profession's most highly regarded academic journals (Lu, 2002;Lu & Ma, 2008;Xia, Ma, Lu, & Yiu, 2014). Her recent work on organizational forms and multi-population dynamics identifies the continuing contested legitimacy of China's private enterprises (Xu, Lu, & Gu, 2014) a subject that will attract growing attention from scholars interested in China's transition.…”