Motivations of Chinese Outward Foreign Direct Investment: An Organizing Framework and Empirical Investigation

Wenyan Yin

Article

This article examines the recent motivations of Chinese outward foreign direct investment (FDI) by introducing a more comprehensive organizing framework. Theoretically, this paper extends Moon and Roehl’s (2001) imbalance theory from the imbalance of firm ownership to locational perspective as an important motivation of MNCs, and finds that such extension can better explain Chinese FDI. This paper also introduces a more comprehensive framework of Chinese FDI motivations, which includes four types of conventional FDI based on ownership or locational advantages and other six types of unconventional FDI. Empirically, this article provides some important proxy variables for FDI motivations and tests hypotheses. The results show that Chinese FDI is driven by conventional types and unconventional types at its early stage of Chinese FDI, which provides important implications for FDI decisions of firms from China and other countries at similar stage of development. This paper also distinguishes the asset-seeking FDI of scientific and commercial technology, and it finds different patterns of spatial distribution regarding the two motivations.

Keywords

Round Building

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