Stephen Morris Blogs

Location Strategy and Firm Value Creation: The case of Chinese MNEs

(University of San Francisco Research Colloquia) Permanent link   All Posts

*When: April 26, Tue, 11:45 AM - 12:45 PM
*Where: CO 317

Title: Location Strategy and Firm Value Creation: The case of Chinese MNEs
Abstract:
The trend of Chinese outward foreign direct investment (OFDI) seems unstoppable. There has been a surge of overseas investment from China both to developing and developed countries. However, we have limited understanding of the impact the internationalization of these firms have on their value creation. In this paper, we draw on organizational learning theory to explore the impact of different types of FDI (i.e, exploitative and explorative FDI) and MNEs’ FDI location choice on firm value creation. Using event study methodology, we find that FDI types affect value creation for Chinese MNEs. In addition, we empirically demonstrate that positive value is created when Chinese MNEs aligned their location choice with international expansion strategy. We contribute to the growing body of literature on internationalization of Chinese firms by empirically verifying whether international expansion creates value for the firm and whether the types of FDI and location strategies have impact on firm value creation. We also contribute to the FDI theory building by extending the traditional FDI theories to the context of emerging market MNEs, namely Chinese MNEs.


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