Revisiting FDI Strategies and the Flow of Firm‐Specific Advantages: A Focus on State‐Owned Enterprises

Abstract

Plain language summaryResearch on the motivations driving multinational enterprises to undertake foreign direct investment (FDI) has largely ignored state‐owned enterprises (SOEs). In this article, we consider the unique motivations of SOEs and demonstrate that such organizations are more likely to undertake FDI in host (foreign) countries with the goal of acquiring unique resources and capabilities that can subsequently be returned to the SOE's home country. This strategic behavior is distinct from the FDI of multinational enterprises, which typically leverage their resources and capabilities in their home countries to expand into host (foreign) countries.Technical summaryThe international business literature has focused on foreign direct investment (FDI) strategies that involve resource seeking, market seeking, and efficiency seeking. Although scholars have introduced the notion of strategic asset‐seeking FDI, questions have been raised about the feasibility of this FDI strategy and the nature of the flows of firm‐specific advantages (FSAs) stemming from it. The present study seeks to address this gap in the literature by identifying new strategic asset‐seeking FDI strategies and the FSA flows associated with them. Because of their unique locational advantages, we contend that the proposed FDI strategies are particularly feasible for state‐owned enterprises (SOEs). We discuss each new FDI strategy using case illustrations of SOEs. Copyright © 2016 Strategic Management Society.