“GO OUT, BUT WHERE?”

—EXAMINING THE INFORMATIONAL ROLE OF INWARD FDI IN LOCATION CHOICES OF EMERGING MARKET FIRMS’ OUTWARD FDI

Time：April 9 (Thursday) 10am -12noon

Location: Zhifuxuan, National School of Development, Peking U.

Speaker: Li, Yu, Associate Professor, UIBE Business School

 

 

Abstract：

The past two decades have witnessed tremendous growth of emerging market countries and increasing outward FDI of emerging market firms. However, due to their lack of overseas experience, emerging market firms may find it challenging to choose destination countries. In this study, we propose that inward FDI from different countries can play an important informational role in directing location choices of emerging market firms’ outward FDI. More specifically, an emerging market firm tends to avoid a foreign country if its industry’s inward FDI from this country enjoys relative technological advantage (RTA). That is, RTA of FDI from a foreign country will be negatively related to the likelihood that an emerging market firm invests in that foreign country. We further verify our assumption by proposing that the informational role of inward FDI will be reduced if alternative information regarding the foreign country is available. Results based upon data on Chinese manufacturing firms’ outward FDI in 1999-2008 strongly support our arguments. We find that RTA of FDI from a foreign country in an industry is negatively related to the likelihood that an emerging market firm in the same industry invests in the foreign country. We also find that the effect of inward FDI on location choice is reduced if alternative (public) information regarding the foreign country is available, as indicated by a bilateral investment treaty between China and the foreign country, as well as the number of patent applications of the foreign country. Moreover, we argue and find that the effect of inward FDI on location choice is reduced if the emerging market firm has generated direct information by exporting to the foreign country. Our arguments and findings can contribute significantly to the understanding of emerging market firms’ outward FDI, a new and increasingly important phenomenon in international business.

 

 

简介：

李瑜教授现任教于对外经贸大学国际商学院，她是北京大学光华管理学院博士， Jones Graduate School of Management, Rice University 访问学者，研究领域为集群及企业竞争优势、外资溢出以及新兴市场国家对外直接投资。她的文章在Strategic Management Journal, Strategic Entrepreneurship Journal 以及Academy of Management Journal等一流期刊均有发表。