China and the Multinationals

China and the Multinationals

International Business and the Entry of China into the Global Economy

New Horizons in International Business series

Edited by Robert Pearce

This original and important book explores how the interaction between China and multinational enterprises has the potential to affect the future of the Chinese economy, the global economy, and international business.

Chapter 7: The Emergence of Chinese Firms as Multinationals: The Influence of the Home Institutional Environment

Peter J. Buckley, Hinrich Voss and Adam R. Cross

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, strategic management, economics and finance, asian economics


Peter J. Buckley, Hinrich Voss, Adam R. Cross and L. Jeremy Clegg1 INTRODUCTION Much of the research to date on the evolution of mainland China’s outward foreign direct investment (OFDI) is based on analyses of official secondary data and in-depth case studies of a small number of high-profile Chinese multinational enterprise (MNEs) (for example, Bonaglia et al., 2007; Buckley et al., 2007; Rugman and Li, 2007; Rui and Yip, 2008; Teagarden and Cai, 2009). While this research sheds some important light on the motives underpinning the internationalisation of Chinese firms, much of it is limited by the application of established international business theories to understanding the phenomenon (for example, Liu and Li, 2002; Wang and Chan, 2003; Deng, 2004). Consequently, and as we argue in this chapter, important dimensions which derive from the specific context of emerging countries are often overlooked or underdeveloped in extant theorising. In particular, we assert that the institutional environment of the home country is an important explanatory factor. In this chapter, we propose a conceptual framework for analysing the effect of this dimension on the overseas investment behaviour of Chinese MNEs. This, we argue, also has relevance for investigating the internationalisation of firms from other developing and transition economies, as we illustrate in the conclusion. A number of propositions are advanced to inform future research on Chinese OFDI, and these can be extrapolated to the investigation of developing country OFDI in general. The framework we develop in this chapter is derived from established international business...

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