Choice of FDI Entry Mode by Chinese MNCs: An Integrated Framework and Empirical Evidence

Date

2007-11

Authors

Cui, Lin
Jiang, Fuming
Stening, Bruce, W

Journal Title

Journal ISSN

Volume Title

Publisher

Canberra, ACT: School of Management, Marketing, and International Business, The Australian National University

Abstract

Based on an integrated theoretical framework of the determinants of foreign direct investment entry mode decisions, comprising the perspectives of strategic behavior, transaction costs, organizational capabilities, and institutional influence, we first conducted a pilot investigation of ten Chinese multinational corporations (MNCs) with the aim of validating the framework. This was followed by a survey of 138 Chinese MNCs which examined the factors that affected those firms’ FDI entry mode choice between wholly owned subsidiary and joint venture. The results suggest that the FDI entry mode choices of Chinese MNCs do not differ from those of Western or developed country MNCs from either an institutional or transaction cost perspective. However, there are major differences between Chinese and Western MNCs from an organizational capability and a strategic behavior perspective. The implications of these findings are discussed, focusing on the decision-making process used by Chinese MNCs in their FDI entry mode choices.

Description

Keywords

Chinese MNC, foreign direct investment, entry mode.

Citation

Source

Type

Working/Technical Paper

Book Title

Entity type

Access Statement

Open Access

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