Abstract
Previous studies on investment location focused on local environmental factors, but tended to overlook the fact that firms’ host-country experience might have an impact on their location strategies and influence the investment performance. This study categorized location strategy in the breadth and depth of foreign investment and hotspots for investment to compensate for the inadequacy of relevant studies. This study chose 120 listed Taiwanese electronics companies that had invested in China between 1999 and 2007, as the research data, to examine the impact of host-country experience on the three types of location strategies and the impact of a specific location strategy on investment performance. This study discovered that as firms increased their host-country experience, the breadth, and depth of their foreign investment increased, as well as their investment in hotspots. In addition, the wider the range a firm’s foreign investments were, the better their investment performance would be. The impact of diversity on investment performance had a deferred effect. However, if firms invested in foreign hotspots, their potential profit might decrease, due to strong competition that detracted from investment performance. Key words: Host-country experience, location strategy, Taiwan IT companies, China.
Highlights
According to statistics from the United Nations, China attracts more foreign investment than any other developing country (United Nations Conference on Trade and Development, UNCTAD, 2009)
This study chose 120 listed Taiwanese electronics companies that had invested in China between 1999 and 2007, as the research data, to examine the impact of host-country experience on the three types of location strategies and the impact of a specific location strategy on investment performance
Taking the year 2008 as an example, the country attracted 92.4 trillion US dollars in total foreign investment. This enormous flow of capital into the country has contributed to rapid growth in the Chinese economy, for example, the Gross Domestic Product (GDP) in 2008 reached 4.4 trillion US dollars(30.067 trillion RMB), an increase of 9% compared to 2007 (National Bureau of Statistics of China, 2009); and the economic growth rate was 9% (Mainland Affairs Council, Executive Yuan, Taiwan, 2009)
Summary
According to statistics from the United Nations, China attracts more foreign investment than any other developing country (United Nations Conference on Trade and Development, UNCTAD, 2009). Taking the year 2008 as an example, the country attracted 92.4 trillion US dollars in total foreign investment This enormous flow of capital into the country has contributed to rapid growth in the Chinese economy, for example, the Gross Domestic Product (GDP) in 2008 reached 4.4 trillion US dollars(30.067 trillion RMB), an increase of 9% compared to 2007 (National Bureau of Statistics of China, 2009); and the economic growth rate was 9% (Mainland Affairs Council, Executive Yuan, Taiwan, 2009). As to the location of this investment, many companies have moved from the region of the Pearl River Delta to that of the Yangtze River Delta, which is more comprehensively equipped, with many related supply chain companies as well as a sound legal environment It has become the most popular location for Taiwanese investment in China. The main objectives in this Taiwanese shift into the Chinese market were the acquisition of basic resources and human capital (Frost, 2001); the securing of components, techniques, and financial support through connections with suppliers in
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
