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Foreign direct investment strategies by developing country multinationals: A diagnostic model for home country effects
Author(s) -
Luo Yadong,
Wang Stephanie Lu
Publication year - 2012
Publication title -
global strategy journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.814
H-Index - 24
eISSN - 2042-5805
pISSN - 2042-5791
DOI - 10.1111/j.2042-5805.2012.01036.x
Subject(s) - multinational corporation , foreign direct investment , internationalization , business , leverage (statistics) , china , developing country , linkage (software) , emerging markets , scale (ratio) , competitive advantage , international business , survey data collection , international economics , international trade , industrial organization , marketing , economics , economic growth , finance , law , macroeconomics , chemistry , computer science , biochemistry , machine learning , political science , gene , mathematics , management , quantum mechanics , statistics , physics
We explore how home country conditions affect outward foreign direct investment (OFDI) strategies (scale, timing, location) employed by developing country multinational corporations (DMNCs). Extending from the springboard and LLL (leverage, linkage, and learning) perspectives, we illustrate that DMNCs rely on their home base during their internalization process in a unique fashion compared with traditional multinationals due to their well‐established strengths at home and competitive weaknesses overseas. Our survey of 153 DMNCs from China shows that, beyond the host country impacts that have been widely studied, DMNCs' overseas investment strategies are influenced by home country environment parameters, including economic growth, perceived institutional hardship, competitive pressure, and by their home country operational characteristics, including inward internationalization, innovation orientation, and business development stage.