English, Article, Journal or magazine article edition: Entry modes of foreign direct investment in China: a multinominal logit approach Yingqi Wei; Xiaming Liu; Bo Liu

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Bookmark: http://trove.nla.gov.au/version/59348
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Entry modes of foreign direct investment in China: a multinominal logit approach
Author
  • Yingqi Wei
  • Xiaming Liu
  • Bo Liu
Physical Description
  • preprint
Notes
  • The existing empirical literature on foreign direct investment (FDI) entry strategies tends to allow a binary choice between wholly owned enterprises (WOEs) and equity joint ventures (EJVs) or between greenfield investment and acquisition only. The current study establishes a multinomial logit model for the choice from all four FDI entry modes in China. Hypotheses involving country-, industry- and firm-specific factors are developed based on transaction cost economics, and tested on a data set covering 10607 foreign invested firms in China. A foreign invested firm is found to prefer the WOE mode given its large investment commitment, a high level of host-country experience in attracting FDI, a good specific industrial location, and a high asset intensity in the host industry. If the conditions of host-country experience and good specific location are not met, the EJV and the joint stock company (JSC) modes would be of greater use. A good specific location also makes the contractual joint venture (CJV) a preferable entry mode. Compared with overseas Chinese investors from Hong Kong, Macao and Taiwan, other foreign investors prefer EJVs over WOEs and CJVs. The results have important implications for managers.
  • Entry Mode, Foreign Direct Investment, Multinomial Logit Model, China
  • RePEc:lan:wpaper:000244
Language
  • English
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