Abstract
This paper presents an empirical study to uncover the relationship between local state ownership and foreign strategic asset seeking (SAS) by Chinese ‘local’ SOEs. The majority of Chinese outward foreign direct investment (OFDI) studies to date have relied on theory and data on centralized Chinese firms. We focus at the provincial level and theorize around two dimensions: (1) local vs central, and (2) state-owned vs privately owned. Using 1124 deals of firm-level cross-sectional OFDI data from provincial level parents and their foreign targets, we test whether and how ‘local’ state ownership marks out Chinese local SOEs as an aggressive and active type of Chinese strategic asset seeker. Our findings contribute to literature in three aspects: (1) Local state ownership has a stronger positive effect than other types of Chinese MNE ownership for pursuing SAS oriented OFDI. (2) State ownership matters more than local ownership when controlling for the year of the deal, and local ownership is more sensitive to year changes for driving OFDI. (3) Patents from foreign targets are more attractive than trademarks to Chinese local SOE investors, which could indicate their long-term oriented business strategy for OFDI.
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