Abstract
Drawing on an institutional perspective, this study analyses how state ownership affects the relationship between foreign direct investment (FDI) drivers and establishment mode choice of emerging-market multinational enterprises (EMNEs). We argue that state-owned EMNEs encounter stronger institutional pressures in technology- and natural resource-rich countries derived from concerns about takeovers of local companies. Moreover, in low-growth markets, state-owned EMNEs do not always behave as pure profit-maximisers since they are usually subject to home government institutional influences and pursue policy goals. For these reasons, we hypothesise that their choice between acquisitions and greenfield investments differs from that of privately-owned EMNEs. Our analysis of 643 FDIs undertaken by Chinese companies confirms that state-owned EMNEs are less likely to choose acquisitions in host countries with a higher technology and natural resource endowment. However, the relationship between host market growth and establishment mode is not influenced by state ownership.
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.
