Imbalanced trade dependence and Chinese firms’ entry mode choices: the moderating effects of state ownership and marketization

Abstract

PurposeApplying resource dependence theory (RDT), this research paper aims to examine the effect of imbalanced trade dependence (ITD) on entry mode choices and how state ownership and marketization each can moderate this effect.Design/methodology/approachUsing data on 1,404 foreign projects made by 493 Chinese listed firms during the 2009–2015 period of time, this study applies logit regression to do the statistical analysis.FindingsIt finds that ITD positively affects the choice of wholly-owned subsidiaries. State ownership and marketization each can moderate this influence.Originality/valueIt develops the concept of ITD, applies it to examine entry mode choices and lets us better understand the substitutive or complementary relationship between governments and foreign firms as two sources of resources. It helps us better understand some competitive advantages of emerging market firms (EMFs) and the impacts of the state on EMFs’ outward FDI. It contributes to entry mode research by applying RDT to explain how ITD influences entry mode choices and how state ownership and marketization each can moderate this relationship.