The location strategy and firm value creation of Chinese multinationals
Abstract
Purpose
There has been a surge of overseas investment from China, both to developing and developed countries. However, there is limited understanding of the impact the internationalization of these firms has on their value creation. This paper seeks to draw on the reconciled FSA/CSA framework with Dunning's four motives to differentiate two types of FDI: traditional FDI and strategic asset-seeking FDI. Further, the paper draws on Verbeke's FSA/CSA recombination process model to analyze the differentiated value creation of traditional FDI and strategic asset-seeking FDI for the Chinese MNEs.
Design/methodology/approach
The paper adopts event study methodology to measure the value created by Chinese MNE's FDI projects and hierarchical linear regression to test the hypotheses. The sample consists of 121 FDI projects publicly announced by Chinese listed companies during 2001-2009.
Findings
Both traditional and strategic asset-seeking FDI create value and traditional FDI creates more value than strategic asset-seeking FDI for Chinese MNEs. In addition, the paper empirically demonstrates that traditional FDI into developing countries creates more firm value than traditional FDI into developed countries or strategic asset-seeking FDI into developed countries.
Originality/value
This research makes the following original contributions: it contributes to the growing body of literature on internationalization of Chinese firms by investigating whether international expansion creates firm value and how the alignment between types of FDI and location strategies influences firm value creation; the study contributes to the literature by providing insights into the performance implications of emerging economy enterprises (EEEs); and the research contributes to FDI theory building by incorporating learning concepts in internationalization theories and by extending the context of internationalization theories to that of EEEs.
Keywords
Acknowledgements
The authors are grateful to the Editor-in-Chief, Professor Alan Rugman, and his editorial team for their careful guidance and the support that were instrumental in the development of this paper. The authors also want to thank Hsieyun Serena Butler-Yang for her valuable editing and proofreading. This research is partly supported by the National Social Science Fund of China (fund code: 09BJY083) and Scientific Research Starting Foundation for Young Faculty of Beijing Technology and Business University (fund code: QNJJ20123-06).
Citation
Yang, Y., Yang, X. and W. Doyle, B. (2013), "The location strategy and firm value creation of Chinese multinationals", Multinational Business Review, Vol. 21 No. 3, pp. 232-256. https://doi.org/10.1108/MBR-03-2013-0012
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited