Peer effects in outward foreign direct investment: evidence from China
ISSN: 0025-1747
Article publication date: 19 September 2019
Issue publication date: 17 March 2020
Abstract
Purpose
Most previous research assumes that the outward foreign direct investment (OFDI) decisions of multinational corporations (MNCs) are made independently of the actions or characteristics of their peers. Therefore, the important influence of peer effects on the OFDI strategy is often neglected. The purpose of this paper is to identify two broad categories of peer effects, i.e. learning-based and profit-driven imitations and examine the important influence of peer effects on MNCs’ internationalization strategy.
Design/methodology/approach
Using Chinese manufacturing firms as the empirical sample, the authors employ an econometric method (logit regression) to test the relationship between peer effects and an internationalization strategy.
Findings
Learning-based and profit-driven imitations are positively associated with a focal MNC’s OFDI decision. Policy uncertainty also positively moderates the relationship between peer effects and the OFDI strategy. Moreover, both peer effects are amplified when a firm is equipped with a dense export network.
Originality/value
The study offers researchers and practitioners a detailed view of interorganizational imitation behavior in terms of an internationalization strategy.
Keywords
Citation
Wang, R. and Zhou, W.C. (2020), "Peer effects in outward foreign direct investment: evidence from China", Management Decision, Vol. 58 No. 4, pp. 705-724. https://doi.org/10.1108/MD-11-2018-1194
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited