The Entry-Mode Decision of Chinese Outward FDI: Firm Resources, Industry Conditions, and Institutional Forces

Abstract

How do Chinese firms make their entry-mode decision for their outward investments? Based on the three theoretical perspectives that balance the "strategy tripod," our study conducted empirical tests using survey data collected from outward-investing Chinese firms. We found that the cost advantage of the investing firm and learning opportunities in the host industry have positive effects on the likelihood of a Chinese firm opting for wholly owned subsidiary against joint-venture entry mode, while the market attractiveness of the host industry, host-country restrictions, cultural barriers, and cognitive pressures have negative effects. Show more