Heterogeneity of Political Connections and Outward Foreign Direct Investment

By examining the heterogeneity of political connections (PCs), this study reconceptualises the relationship between PCs and outward foreign direct investment (OFDI). Drawing upon resource dependence theory, we hypothesise that firms with ascribed PCs benefit from top political privileges in their home market and have a low OFDI commitment. Firms without any PCs have a medium OFDI commitment because they have to avoid the discriminative competition associated with their inferior political status. Firms with acquired PCs possess relatively strong political and market resources and face exchange pressure; thus, they exhibit a high OFDI commitment. The aforementioned hypotheses are supported by empirical results from probit and Tobit models based on panel data of 482 listed Chinese firms with OFDI from 2003 to 2014.

Reference:

Ziliang Deng, Jiayan Yan and Marc van Essen. 2018. Heterogeneity of Political Connections and Outward Foreign Direct Investment, International Business Review, first published 21 February 2018: https://www.sciencedirect.com/science/article/pii/S096959311730327X

2018-03-06T13:14:17+00:00 By |

About the Author:

Marc van Essen
Marc van Essen (PhD Erasmus University) is an Associate Professor of International Business at the Moore School of Business, University of South Carolina and permanent visiting professor at emlyon business school, France. His research interests include comparative corporate governance, international business, family business, and meta-analytic research methods. His works applying meta-analysis have been published or are forthcoming in the following journals: Academy of Management Journal, Journal of Banking and Finance, Journal of International Business Studies, Journal of Management, Journal of Management Studies, and Organization Science, and other outlets.

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