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Location Differences between Privatized State-Associated Enterprises (PSEs) and Privately Owned Enterprises (POEs) from China in Outward Foreign Direct Investment (OFDI)

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한국국제경영학회 (Korean Academy of International Business)|2014.02|국제경영연구 (International Business Journal)|제25권 제1호|pp. 143-177|DOI http://dx.doi.org/10.14365/ibj.2014.25.1.6

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참고문헌

키워드

민간기업developing country multinational companies (DMNCs)Chinese outward foreign direct investment (OFDI)Chinese multinational companies (MNCs)privatized state-associated enterprises (PSEs)privately owned enterprises (POEs)개도국 다국적기업중국의 해외직접투자중국 다국적기업민간기업 전환 국영기업
주제분류경영학

초록

This study examines the determinants of foreign direct investment (FDI) location choices by Chinese firms from a unique perspective. Based on research into the privatization process in China, we categorize Chinese private enterprises into two types: Privatized state-associated enterprises (PSEs) which had been founded as state firms and completely privatized later, and enterprises that have been privately owned from their founding (POEs). To our knowledge, this has not been done before in the international business literature. In this paper, we establish four hypotheses regarding the differences between PSEs and POEs in how they select outward FDI (OFDI) locations and empirically test these by estimating a regression model, using the host country variables of natural resources, strategic assets, risk and Chinese networks. The results indicate that PSEs are more attracted to host countries with rich natural resources and strategic assets than POEs. However, PSEs are less concerned with local Chinese networks. This study is the first attempt to investigate how privatized state enterprises and purely private firms differ in their FDI location choices. It recognizes the profound impact of both the Chinese privatization process and the intra-group heterogeneity of private firms on their FDI behavior by a comparison between PSEs and POEs that has not previously been explored in the extant literature.

Abstract

This study examines the determinants of foreign direct investment (FDI) location choices by Chinese firms from a unique perspective. Based on research into the privatization process in China, we categorize Chinese private enterprises into two types: Privatized state-associated enterprises (PSEs) which had been founded as state firms and completely privatized later, and enterprises that have been privately owned from their founding (POEs). To our knowledge, this has not been done before in the international business literature. In this paper, we establish four hypotheses regarding the differences between PSEs and POEs in how they select outward FDI (OFDI) locations and empirically test these by estimating a regression model, using the host country variables of natural resources, strategic assets, risk and Chinese networks. The results indicate that PSEs are more attracted to host countries with rich natural resources and strategic assets than POEs. However, PSEs are less concerned with local Chinese networks. This study is the first attempt to investigate how privatized state enterprises and purely private firms differ in their FDI location choices. It recognizes the profound impact of both the Chinese privatization process and the intra-group heterogeneity of private firms on their FDI behavior by a comparison between PSEs and POEs that has not previously been explored in the extant literature.

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