Institutional fragility and outward foreign direct investment from China

Weilei Stone Shi, Sunny Li Sun, Daying Yan, Zhu Zhu

Research output: Contribution to journalArticleResearchpeer-review

22 Citations (Scopus)

Abstract

We develop the concept of institutional fragility to investigate the outward foreign direct investment (OFDI) behavior of firms from emerging economies. When different dimensions of institutions are not progressing at the same pace, internal friction and conflict arise during institutional development. Such fragility could push a firm to escape its home country as a strategic response. Using a sample of 578,360 Chinese firm-year observations over a 10-year period, we find that institutional fragility at the provincial level is associated with increased OFDI decision. This relationship is weaker when firms have high productivity or have been controlled by state with high ownership, stronger when firms have a high level of export network. Overall, our institutional fragility perspective extends and enriches the institution-based view and offers new insights into OFDI behavior.

Original languageEnglish
Pages (from-to)452-476
Number of pages25
JournalJournal of International Business Studies
Volume48
Issue number4
DOIs
StatePublished - 1 May 2017

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Internal friction
Productivity
China
Outward foreign direct investment
Fragility
Investment behavior
Emerging economies
Institutional development
Home country
Ownership
Institution-based view
Investment decision
Friction
Chinese firms
Strategic response

Keywords

  • emerging economies
  • institution-based view
  • market-based reform
  • outward foreign direct investment

Cite this

Shi, Weilei Stone ; Sun, Sunny Li ; Yan, Daying ; Zhu, Zhu. / Institutional fragility and outward foreign direct investment from China. In: Journal of International Business Studies. 2017 ; Vol. 48, No. 4. pp. 452-476.
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Institutional fragility and outward foreign direct investment from China. / Shi, Weilei Stone; Sun, Sunny Li; Yan, Daying; Zhu, Zhu.

In: Journal of International Business Studies, Vol. 48, No. 4, 01.05.2017, p. 452-476.

Research output: Contribution to journalArticleResearchpeer-review

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