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FDI and Institutional Quality: New Insights and Future Perspectives from Emerging and Advanced Economies

A special issue of Sustainability (ISSN 2071-1050).

Deadline for manuscript submissions: closed (30 September 2020) | Viewed by 57139

Special Issue Editors


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Guest Editor
Management, Kedge Business School, Bordeaux, France
Interests: FDI; internationalization; political risk; psychic distance; multinational enterprises; global virtual teams
Special Issues, Collections and Topics in MDPI journals

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Guest Editor
Department of Global Management, School of Business Management, Hongik University, Sejong 30016, Korea
Interests: international business; emerging market MNEs; MNE innovation; corporate social responsibility; business ethics
Special Issues, Collections and Topics in MDPI journals

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Guest Editor
ESPAE Graduate School of Management, Escuela Superior Politecnica del Litoral, Guayaquil, Ecuador
Interests: FDI; internationalization; emerging markets; global virtual teams; international entrepreneurship
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The influence of institutional quality on the economic environment has been long acknowledged by researchers, notably as a main driver of foreign direct investment (FDI). Despite the abundant literature, the majority of papers analyze advanced and emerging economies either separately or without making a distinction between them. Unfortunately, it is not yet fully understood how the influence of institutional quality varies across contexts. In particular, the idiosyncrasies of emerging economies—typically characterized not only by institutional voids, higher corruption and political risk, and lower financial development, but also by recent higher economic growth—make these countries likely to differ from advanced economies.

The goal of this Special Issue is to expand the existing literature on these themes, by offering new insights and future perspectives about the differences in the relationship between FDI and institutional quality in these two different contexts and the potential repercussions in terms of sustainability for the countries in question.

We invite both conceptual and empirical research on the above themes. We are particularly interested in research combining multiple theoretical backgrounds and methodological approaches, as well as literature reviews or theory papers. Examples of relevant topics for this Special Issue include, but are not limited to, the following:

  • How does institutional quality affect FDI in emerging economies? What are the differences compared with advanced economies?
  • What are the repercussions of the relationship between institutional quality and FDI in terms of sustainability for the host country and/or for the home country?
  • How do the new political and social trends in recent years affect institutional quality in emerging and advanced economies, and which new trends of FDI are emerging?
  • Which institutional quality indicators have a stronger impact as barriers or attractors for FDI?
  • How do individual, team, firm, and regional factors interact with institutional quality, and what are the repercussions for multinational enterprises?
  • How does institutional quality affect small- and medium-sized enterprises vs. large ones?
  • How are emerging economies’ multinational enterprises affected by institutional quality in their internationalization processes?

Dr. Alfredo Jiménez
Dr. Jeoung Y. Lee
Dr. Xavier Ordeñana
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • FDI
  • institutional quality
  • multinational enterprises
  • internationalization
  • emerging economies
  • advanced economies

Published Papers (15 papers)

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Editorial

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4 pages, 171 KiB  
Editorial
Introduction: FDI and Institutional Quality: New Insights and Future Perspectives from Emerging and Advanced Economies
by Alfredo Jimenez, Jeoung Yul Lee and Xavier Ordeñana
Sustainability 2021, 13(8), 4413; https://doi.org/10.3390/su13084413 - 15 Apr 2021
Cited by 2 | Viewed by 1477
Abstract
The influence of institutional quality on the economic environment has been long acknowledged by researchers, notably as a main driver of Foreign Direct Investment (FDI) [...] Full article

Research

Jump to: Editorial

21 pages, 1012 KiB  
Article
Ambidextrous Marketing Capabilities, Exploratory and Exploitative Market-Based Innovation, and Innovation Performance: An Empirical Study on China’s Manufacturing Sector
by Peixu He, Yana Pei, Chunpei Lin and Di Ye
Sustainability 2021, 13(3), 1146; https://doi.org/10.3390/su13031146 - 22 Jan 2021
Cited by 15 | Viewed by 3796
Abstract
Despite the acknowledged importance of innovation for enterprises’ sustainable development, in comparison to technological innovation, research on market-based innovation is still in its nascent stage. It is unclear what factors will predict market-based innovation and how market-based innovation boosts innovation performance. Therefore, based [...] Read more.
Despite the acknowledged importance of innovation for enterprises’ sustainable development, in comparison to technological innovation, research on market-based innovation is still in its nascent stage. It is unclear what factors will predict market-based innovation and how market-based innovation boosts innovation performance. Therefore, based on an adaptive marketing capabilities perspective and drawing on insights from the organizational ambidexterity literature, this study explored the relationships among enterprises’ marketing capabilities, market-based innovation and innovation performance. Data collected from 237 manufacturing enterprises in China were analyzed using hierarchical regression analysis and bootstrapping methods. The results showed that: (1) Marketing capabilities and market-based innovation activities are both ambidextrous. Specifically, marketing capabilities include marketing exploration capabilities and marketing exploitation capabilities, and market-based innovation includes exploratory market-based innovation and exploitative market-based innovation. (2) Ambidextrous marketing capabilities can enhance innovation performance significantly, with ambidextrous market-based innovation playing a partial mediating role in this relationship. Specifically, marketing exploration capabilities affect innovation performance through the partial mediating role of exploratory market-based innovation, whereas marketing exploitation capabilities affect innovation performance through the partial mediating role of exploitative market-based innovation. (3) Exploratory market-based innovation negatively moderates the relationship between exploitative market-based innovation and innovation performance, and exploitative market-based innovation also exerts a negative moderating effect on the exploratory market-based innovation–innovation performance association. These findings complement and enrich the ambidextrous capability (innovation) theory, helping manufacturing enterprises to better understand and deploy ambidexterity, and hence to achieve sustainability. Full article
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20 pages, 1192 KiB  
Article
Global Imbalances: The Role of Institutions, Financial Development and FDI in the Context of Financial Crises
by Carlos A. Silva, Xavier Ordeñana, Paul Vera-Gilces and Alfredo Jiménez
Sustainability 2021, 13(1), 356; https://doi.org/10.3390/su13010356 - 2 Jan 2021
Cited by 4 | Viewed by 3422
Abstract
This paper examines the role of the quality of institutions, financial development and FDI on current account imbalances, which narrowed during the Global Financial Crisis. In doing so, we utilize (i) a sample of 49 advanced and emerging economies during 1984–2014; [...] Read more.
This paper examines the role of the quality of institutions, financial development and FDI on current account imbalances, which narrowed during the Global Financial Crisis. In doing so, we utilize (i) a sample of 49 advanced and emerging economies during 1984–2014; (ii) a novel three-clustered indices of institutional quality and (iii) two measures of financial development, the share of FDI and a measure of financial crisis in addition to standard determinants of the current account. We find that the better the quality of institutions and the greater the financial development, the larger are current account deficits; meanwhile, FDI contributes to boost current account balances. Moreover, financial crisis episodes tend to improve current account balances, particularly for countries that are highly open to trade and to receive FDI, as in the case of advanced economies and East Asian countries. Full article
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20 pages, 1023 KiB  
Article
Home Country Institutions and Outward FDI: An Exploratory Analysis in Emerging Economies
by Ricardo E. Buitrago R. and María Inés Barbosa Camargo
Sustainability 2020, 12(23), 10010; https://doi.org/10.3390/su122310010 - 30 Nov 2020
Cited by 15 | Viewed by 3028
Abstract
Although the internationalization of economies is driven by specific industry conditions or business-specific differences, the institutions that exist as background conditions directly determine firms’ strategies and interactions in the international environment. This paper contributes to the discussion on the relationship between institutional quality [...] Read more.
Although the internationalization of economies is driven by specific industry conditions or business-specific differences, the institutions that exist as background conditions directly determine firms’ strategies and interactions in the international environment. This paper contributes to the discussion on the relationship between institutional quality and outward FDI (OFDI). We used 30 indicators in 48 emerging economies in the period 2007–2017; we collected the indicators from alternative secondary sources. After we applied Factor Analysis, six factors were retained. We named the components as follows: “Transparency of government” (F1), “Research, development and innovation, R&D+I” (F2), “Inequality” (F3), “Rules on inward FDI (IFDI)” (F4), “Education and training” (F5), and “Financial market” (F6). The panel data model outcomes suggest that Factor 2, Research, development and innovation, has a significant and positive effect on OFDI. Factor 6, the Financial market, has a significant and negative effect on OFDI. When we include lagged values of OFDI stocks the results also show that the government measures transparency positively and significantly affects OFDI stocks. These findings imply that the institutional environment creates two streams of OFDI: leverage and escapism. Full article
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18 pages, 1201 KiB  
Article
The Impact of the Technological Capability of a Host Country on Inward FDI in OECD Countries: The Moderating Roles of Institutional Quality
by Seunghyun Kim and Byungchul Choi
Sustainability 2020, 12(22), 9711; https://doi.org/10.3390/su12229711 - 21 Nov 2020
Cited by 8 | Viewed by 2474
Abstract
This empirical study explores the impacts of technological capability on inward foreign direct investment (FDI) with the moderations of institutional quality. We extend the existing literature by contributing the dynamic links between technology trade and institutional quality by using the panel data of [...] Read more.
This empirical study explores the impacts of technological capability on inward foreign direct investment (FDI) with the moderations of institutional quality. We extend the existing literature by contributing the dynamic links between technology trade and institutional quality by using the panel data of 35 Organization for Economic Cooperation and Development (OECD) countries between 2000 and 2015. Based on fixed-effects regression, our results show that there is a U-shape relationship between the net technological capability of a host country and inward FDI. In addition, the institutional quality of a host country, government size and regulation have positive moderations, whereas sound money accessibility and legal system and property protection have negative moderations on the main U-shape relationship. Our study contributes to the literature on the determinants of inward FDI in the context of technological capabilities and institutional quality. Full article
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21 pages, 705 KiB  
Article
Effects of Special Economic Zones on FDI in Emerging Economies: Does Institutional Quality Matter?
by Yijia Song, Ruichen Deng, Ruoxi Liu and Qian Peng
Sustainability 2020, 12(20), 8409; https://doi.org/10.3390/su12208409 - 13 Oct 2020
Cited by 13 | Viewed by 6129
Abstract
This study attempts to prove that emerging markets could partially improve institutional quality in a specific area and benefit the local economy despite the rest of the area having poor institutions. Interestingly, we observed that despite the presence of institutions of comparative disadvantage, [...] Read more.
This study attempts to prove that emerging markets could partially improve institutional quality in a specific area and benefit the local economy despite the rest of the area having poor institutions. Interestingly, we observed that despite the presence of institutions of comparative disadvantage, emerging economies continue to constantly attract significant foreign direct investment. Hence, this study focuses on a type of place-based policy in China that provides a standard favorable institutional environment in a specific area. Using data from China’s Annual Survey of Industrial Firms and combining official lists of Chinese special economic zones (SEZs), we obtained a dataset of 2660 SEZs from 1998 to 2018, and a sample of 37,251 from 1998 to 2013. Then, we empirically examined the impact and mechanism of SEZs on foreign investment by using time-varying difference-in-difference specification. After a sequence of validity and robustness checks, we found that the establishment of SEZs significantly enhances foreign entry. We also found that partial institutional quality improvement of SEZs is a key mechanism in the location of foreign investment. We conclude that it is beneficial for the government to impose place-based policies such as SEZs that improve partial institutional quality efficiently and promote the local economy. Full article
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17 pages, 1967 KiB  
Article
Institutional Quality, FDI, and Productivity: A Theoretical Analysis
by Jaewon Jung
Sustainability 2020, 12(17), 7057; https://doi.org/10.3390/su12177057 - 29 Aug 2020
Cited by 27 | Viewed by 3502
Abstract
While many important links between institutional quality and foreign direct investment (FDI) inflows and/or between inward FDI and economic development through productivity growth have been uncovered, the full links between emerging and advanced economies are not yet well understood. This paper develops a [...] Read more.
While many important links between institutional quality and foreign direct investment (FDI) inflows and/or between inward FDI and economic development through productivity growth have been uncovered, the full links between emerging and advanced economies are not yet well understood. This paper develops a model of FDI with an explicit distinction between the two economies where domestic and multinational firms using different technologies compete on the final good market and highlights the institutional quality–FDI–productivity link within a unified theoretical general equilibrium framework. We show that an improvement of institutional quality in the emerging economies induces pervasive technology-upgrading effects in the advanced economies, which generates aggregate productivity gains. Full article
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21 pages, 770 KiB  
Article
Does the Choice of IJV under Institutional Duality Promote the Innovation Performance of Chinese Manufacturing Firms? Evidence from Listed Chinese Manufacturing Companies
by Chong Wu, Siyi Bo, Xing Wan, Min Ji, Meihua Chen and Shifan Zhang
Sustainability 2020, 12(17), 6869; https://doi.org/10.3390/su12176869 - 24 Aug 2020
Cited by 2 | Viewed by 2779
Abstract
The relationship between the strategic choice of internationalization under institutional duality and the performance of emerging market multinational enterprises (EM-MNEs) will become a focal point for scholars, practitioners and policy makers in the future. In order to better understand the determinants of the [...] Read more.
The relationship between the strategic choice of internationalization under institutional duality and the performance of emerging market multinational enterprises (EM-MNEs) will become a focal point for scholars, practitioners and policy makers in the future. In order to better understand the determinants of the entry mode choice under institutional duality for EM-MNEs, based on the sample of Chinese manufacturing listed companies ‘going out’ from 2003 to 2015, we investigated the impact of organization institutional inertia and host-country institutional quality on the choice of the international joint venture (IJV) of Chinese manufacturing firms, as well as the effect and potential problems of the IJV choice on the firms’ innovation performance under institutional duality. The main results of our empirical analyses provide evidence that the response to institutional duality means that Chinese firms have the possibility to choose IJV in entry modes ahead of their capability support, and subject to insufficient professional field accumulation, cross-cultural management and joint governance capability, this premature choice of IJV actually hinders their innovation efficiency. Furthermore, the test on the influence of firm heterogeneity found that, when the firm is privately owned or has a lower internationalization breadth, the above negative moderating effect of IJV choice is more significant. Our findings enrich the literature on the relationship between the strategic choice of internationalization and innovation performance of EM-MNEs, and provide inspiring and straightforward empirical evidence. Full article
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24 pages, 1370 KiB  
Article
Foreign-Funded Enterprises and Pollution Halo Hypothesis: A Spatial Econometric Analysis of Thirty Chinese Regions
by Alexandre Repkine and Dongki Min
Sustainability 2020, 12(12), 5048; https://doi.org/10.3390/su12125048 - 20 Jun 2020
Cited by 30 | Viewed by 2903
Abstract
China is one of the world’s major environmental polluters, therefore, Chinese environmental efficiency is an issue of global importance. In this study, we aim to identify economic factors affecting environmental efficiency scores in different regions of China from a spatial econometric perspective. We [...] Read more.
China is one of the world’s major environmental polluters, therefore, Chinese environmental efficiency is an issue of global importance. In this study, we aim to identify economic factors affecting environmental efficiency scores in different regions of China from a spatial econometric perspective. We measure environmental efficiency scores, relative to the theoretically consistent production possibilities frontier estimated, according to a novel iterative methodology. As expected, we find that environmental efficiency scores are negatively affected by the prevalence of heavy industry sector in the economy, with a higher share of coal as a source of energy exacerbating the problem. We also find evidence that strongly support the pollution halo hypothesis, which credits foreign-funded enterprises with producing in a more environmentally-friendly way. Surprisingly, we find a negative association between the share of tertiary sectors in a regional economy and environmental efficiency—emphasizing the need to address the indirect effects produced on the environment by the seemingly innocuous sectors, such as the hotel sector. We encourage the creation of foreign-funded enterprises, and support formulating environmental protection policies that consider the indirect effects various economic sectors have on the environment. Full article
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21 pages, 320 KiB  
Article
The Influence of Risk Culture on the Performance of International Joint-Venture Securities
by Xiaoteng Ma, Ziyu Tang, Dan Wang and Hao Gao
Sustainability 2020, 12(7), 2603; https://doi.org/10.3390/su12072603 - 25 Mar 2020
Cited by 5 | Viewed by 3088
Abstract
With the development of economic globalization, culture is a key factor supporting the sustainability of foreign direct investment (FDI), especially for multinational enterprises. This paper takes the Chinese capital market as a sample and, combined with interviews with managers of international joint-venture securities [...] Read more.
With the development of economic globalization, culture is a key factor supporting the sustainability of foreign direct investment (FDI), especially for multinational enterprises. This paper takes the Chinese capital market as a sample and, combined with interviews with managers of international joint-venture securities (IJVS), finds that the culture of participants formed in developed and emerging capital market has a significant impact on the performance of IJVS. Using the degree of price fluctuation to measure the risk culture of each capital market, this paper observes that the risk culture in the Chinese capital market is significantly stronger than that of developed countries. This paper also finds that the stronger the risk culture IJVS shareholders have, the better they can adapt to the environment of the Chinese capital market and the better the performance they can achieve. Furthermore, risk culture distance, calculated by the risk culture differences between foreign shareholders and Chinese capital market, are significantly negatively correlated with IJVS performance and efficiency. Full article
21 pages, 1224 KiB  
Article
Business Strategy, State-Owned Equity and Cost Stickiness: Evidence from Chinese Firms
by Tingyong Zhong, Fangcheng Sun, Haiyan Zhou and Jeoung Yul Lee
Sustainability 2020, 12(5), 1850; https://doi.org/10.3390/su12051850 - 1 Mar 2020
Cited by 7 | Viewed by 4022
Abstract
This paper investigates the relationship between business strategy and cost stickiness under different ownership. Using the data from listed firms in China from 2002 to 2015, we find that first, firms with different strategies exhibit different cost behavior. The cost stickiness of choosing [...] Read more.
This paper investigates the relationship between business strategy and cost stickiness under different ownership. Using the data from listed firms in China from 2002 to 2015, we find that first, firms with different strategies exhibit different cost behavior. The cost stickiness of choosing a differentiation strategy is higher than that of choosing a low-cost strategy. Second, management expectations will affect cost stickiness. Optimistic expectations will increase cost stickiness, while pessimistic expectations will reduce cost stickiness. Third, management expectations can adjust the relationship between business strategy and cost stickiness in terms of government-created advantages (GCAs). If management expectations tend to be optimistic, the cost stickiness is higher with a differentiation strategy than with a low-cost strategy. If management expectations tend to be pessimistic, then cost stickiness is higher with a low-cost strategy than with a differentiation strategy. Finally, the state-owned equity affects the extent of the effect of a differentiation strategy on cost stickiness. State-owned firms, which receive more GCAs than non-state-owned firms, have stronger cost stickiness than non-state-owned firms, even if both categories of firms use more differentiation strategy. Full article
21 pages, 780 KiB  
Article
Does China’s Outward Direct Investment Improve the Institutional Quality of the Belt and Road Countries?
by Chunyang Pan, William X. Wei, Etayankara Muralidharan, Jia Liao and Bernadette Andreosso-O’Callaghan
Sustainability 2020, 12(1), 415; https://doi.org/10.3390/su12010415 - 5 Jan 2020
Cited by 19 | Viewed by 7505
Abstract
This article investigates the effects of China’s outward direct investment (ODI) on the institutional quality of the Belt and Road (B&R) countries. Based on a panel data set of 63 B&R countries during the period 2003 to 2016, we find that China’s ODI [...] Read more.
This article investigates the effects of China’s outward direct investment (ODI) on the institutional quality of the Belt and Road (B&R) countries. Based on a panel data set of 63 B&R countries during the period 2003 to 2016, we find that China’s ODI improves the institutional quality of B&R countries not only in the short run but also in the long run. Further, although China’s ODI exerts no differential impacts on host country institutional dimensions of “control of corruption,” “government effectiveness,” and “political stability” in countries with different natural resource endowments, it improves their institutional dimensions of “regulatory quality” and “rule of law,” implying that China’s ODI may help the host B&R countries minimize the “resource curse”. As one of the most important strategies for China’s opening-up development in the current era, the B&R initiative serves as means to promote sustainable development of B&R countries. The article therefore contributes to existing scholarship on the institutional effects of China’s ODI and sheds light on the mechanisms that drive sustainable development. Full article
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16 pages, 1320 KiB  
Article
Resolving Conflict between Parties and Consequences for Foreign Direct Investment: The Repsol-YPF Case in Argentina
by Raquel Fernández González, María Elena Arce Fariña and María Dolores Garza Gil
Sustainability 2019, 11(21), 6012; https://doi.org/10.3390/su11216012 - 29 Oct 2019
Cited by 6 | Viewed by 6039
Abstract
In 2012, the Argentine government expropriated 51% of the shares of Yacimientos Petrolíferos Fiscales S.A. (YPF) from the Spanish company Repsol S.A. The YPF was nationalized without prior compensation, violating Argentina’s own laws and, consequently, the institutional framework in force in the country. [...] Read more.
In 2012, the Argentine government expropriated 51% of the shares of Yacimientos Petrolíferos Fiscales S.A. (YPF) from the Spanish company Repsol S.A. The YPF was nationalized without prior compensation, violating Argentina’s own laws and, consequently, the institutional framework in force in the country. As a consequence, the country’s reputation deteriorated and, although there were several contacts with multinational enterprises to become YPF’s new partner, the investment climate was affected, making it really difficult to attract Foreign Direct Investment (FDI). In order to attract these investments after the expropriation, the Argentine government understands that it is necessary to settle the legal proceedings with Repsol. In order to avoid an imperfect judicial procedure of long duration and with high transaction costs, both parties reached a settlement agreement. This paper presents an institutional economic analysis of expropriation, contextualizing it within the Argentine institutional framework and studying the trajectory of the nationalization of YPF. In this way, it seeks to contextualize institutionally the Argentine government’s decision and the impact it has had on both the FDI and the credibility of the country’s institutional framework. It also analyzes how the resolution of the conflict occurs through an agreement between the parties that avoids the judicial process, given its high transaction costs. Full article
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17 pages, 409 KiB  
Article
Influence of Family Involvement on Family Firm Internationalization: The Moderating Effects of Industrial and Institutional Environments
by Lixin Zhou, Yan Han and Chaoli Gou
Sustainability 2019, 11(20), 5721; https://doi.org/10.3390/su11205721 - 16 Oct 2019
Cited by 11 | Viewed by 2785
Abstract
This paper aimed to explore the effects of family ownership and management on Chinese family firm internationalization, and to examine the moderating effects of environmental munificence, institutional environment, and political ties in this relationship. A questionnaire survey of 274 family firms in 8 [...] Read more.
This paper aimed to explore the effects of family ownership and management on Chinese family firm internationalization, and to examine the moderating effects of environmental munificence, institutional environment, and political ties in this relationship. A questionnaire survey of 274 family firms in 8 provinces or municipalities in China was conducted to test the proposed hypotheses empirically. The results were as follows: First, family ownership and management positively impacted the depth and breadth of internationalization. Second, environmental munificence weakened the effect of family ownership on the depth of internationalization, as well as on the effect of family management on the breadth of internationalization, but intensified the effect of family management on the depth of internationalization. Third, the institutional environment intensified the effects of family management on the depth and breadth of internationalization. Finally, political ties weakened the effect of family management on the depth of internationalization, but intensified the effect of family ownership on the breadth of internationalization. The contributions and implications of this study are also discussed. Full article
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11 pages, 507 KiB  
Article
FDI, Institutional Quality, and Bribery: An Empirical Examination in China
by Kum-Sik Oh and Yeon-Sik Ryu
Sustainability 2019, 11(15), 4023; https://doi.org/10.3390/su11154023 - 25 Jul 2019
Cited by 8 | Viewed by 2593
Abstract
This study attempts to identify the key factors inhibiting the bribery practices of multinational enterprise (MNE) subsidiaries directed at local managers in China. During the experiment, this study employs an institutional theory, identifies primary determinants on the phenomenon, and compares the main components [...] Read more.
This study attempts to identify the key factors inhibiting the bribery practices of multinational enterprise (MNE) subsidiaries directed at local managers in China. During the experiment, this study employs an institutional theory, identifies primary determinants on the phenomenon, and compares the main components between old versus young subsidiaries. Data were collected through a questionnaire survey and both regression and spearman rank order correlation analyses were used as statistical techniques. Through the analyses, we found that a cognitive pillar is a crucial element contributing to the inhibition of bribery practices, the enhancement of institutional quality, and the promotion of sustainable development in the emerging economy. We expect that the results will provide useful implications for MNE managers planning to invest in China and for policy makers enacting institutional environments. Full article
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