Motives for Outward FDI of Chinese Private Firms Firm Resources.pdf

Management and Organization Review 7:2 223–248 doi: 10.1111/j.1740-8784.2010.00184.x Motives for Outward FDI of Chinese Private Firms: Firm Resources, Industry Dynamics, and Government Policies more_184 223..248 Jiangyong Lu, 1 Xiaohui Liu,2 and Hongling Wang3 1Peking University, China, 2Loughborough University, UK, and 3 Chinese Academy of Social Sciences, China ABSTRACT Using recent survey data, this study examines the impact of firm resources, industry dynamics, and government policies on the outward foreign direct investment (FDI) motives of Chinese firms, based on the integrated ‘strategy tripod’ framework. The results suggest that supportive government policies are important motivators for both strategic asset-seeking and market-seeking outward FDI. Firms’ technology-based competitive advantages and a high level of industry research and development (RD) intensity tend to motivate strategic asset-seeking outward FDI, whereas firm’s export experience and higher level of domestic industry competition tend to induce market-seeking outward FDI. KEYWORDS Chinese private firms, market-seeking outward FDI, outward FDI motives, strategic asset-seeking outward FDI INTRODUCTION Outward foreign direct investment (outward FDI) from emerging economies (EE) has increased substantially in recent years (UNCTAD, 2006). A more thorough understanding of the special circumstances that surround this new breed of mul- tinational enterprise (MNE) from EE can help to extend the existing MNE theo- ries further (Luo Tung, 2007). Recent theoretical studies highlight that a major difference between EE MNEs and MNEs from developed economies (DE MNEs) is that the former are driven by different motives (Mathews, 2006; Witt Lewin, 2007). While DE MNEs are more likely to exploit their comp