Pro-market institutions and outward FDI of emerging market firms: an institutional arbitrage logic
Date
2021
Authors
Tang, R.W.
Editors
Advisors
Journal Title
Journal ISSN
Volume Title
Type:
Journal article
Citation
International Business Review, 2021; 30(3, article no. 101814):1-15
Statement of Responsibility
Conference Name
Abstract
We offer new theory and evidence regarding the effects of pro-market institutions on outward foreign direct investment (FDI) of emerging market firms (EMFs). Drawing on the logic of institutional arbitrage, we integrate the escapism and exploitation mechanisms of EMF internationalization into a unified theoretical context. We propose an inverted U-shaped relationship between host market-supporting institutions (MSI) and the investment scale of an EMF’s FDI project in the country, showing an escape-driven upward slope for low-to-medium MSI levels and an exploitation-driven downward slope for medium-to-high MSI levels. We supplement this main argument with two boundary conditions: the alleviating effect of home market liberalization (HML) and the strengthening effect of home government subsidies (HGS), demonstrating the coexistence and variation of pro- and anti- market institutions in an emerging market. Using information on 1,450 FDI projects conducted by 288 Chinese listed firms in 116 host countries, we obtain supportive evidence for the predicted relationships between the three institutional forces. This study enriches the literatures on institutional arbitrage and pro-market institutions with evidence from EMFs.
School/Discipline
Dissertation Note
Provenance
Description
Data source: Supplementary data, https://doi.org/10.1016/j.ibusrev.2021.101814
Access Status
Rights
Copyright 2021 Elsevier