Journal Article

Outward foreign direct investment by emerging market firms: A resource dependence logic

Xia, Jun, Lu, Jane W., Ma, Xufei, Yiu, Daphne W.

2014

Overview

This study examines and extends the resource dependence logic of diversification for a better understanding of outward foreign direct investment (OFDI) activities by emerging market firms. We contend that the diversification logic is bounded by state ownership, an important but less considered component of interdependence. Our empirical results, based on panel data analysis of Chinese listed firms, suggest that the level of interdependence between Chinese and foreign firms in China in multiple forms, including symbiotic, competitive, and partner interdependencies, is positively associated with the level of the Chinese firms' OFDI activities. However, Chinese firms with higher levels of state ownership are less susceptible to the pressures imposed by foreign firms to invest abroad.

• Publisher: John Wiley & Sons, Ltd,John Wiley & Sons,Wiley Periodicals Inc
• Subject: Bargaining power / Business entities / China / Companies / Corporate strategies / Data analysis / Diversification / emerging market firm / Emerging markets / Empirical research / Energy resources / Foreign business / Foreign companies / Foreign direct investment / Foreign direct investments / Foreign enterprises / Foreign investment / Home ownership / Interdependence / Local government / Logic / Markets / outward foreign direct investment / Ownership / Panel data / Portfolio diversification / Public ownership / resource dependence theory / Resource ownership / state ownership / Strategic management / Studies