Heterogeneity in OFDI by EMNEs: Drivers and trends of Chinese and Indian firms. Issue 6 (December 2022)

• Record Type: Journal Article
• Authors: Zhu, Ying; Sardana, Deepak; Tang, Ryan
• Is Part Of: International business review. Volume 31:Issue 6(2022)
• Publication Date: 2022-12
• Subjects: EMNEs -- OFDI -- China -- India -- Heterogeneity -- Drivers and trends; International business enterprises -- Periodicals; 338.8805
• DOI: 10.1016/j.ibusrev.2022.102013
• Languages: English
• ISSNs: 0969-5931

Abstract

Abstract: Previous research has identified a distinction between the internationalization of emerging market multinational enterprises (EMNEs) and their advanced-economy counterparts. However, the question as to whether EMNEs conduct outward foreign direct investment (OFDI) in a uniform manner remains under-studied. Prior studies have grouped together all emerging markets but have ignored the essential heterogeneity of EMNEs that leads to their diverse OFDI patterns and behaviours. In this study, we illustrate the drivers and related phenomena of heterogeneity by exploring differences and similarities between Chinese and Indian MNEs' OFDI activities, namely, investment destinations (i.e., advanced vs. emerging economies), the level of political relationships with host countries, industry sectors supported by institutional patronage, and the primary motivations of investment projects. We suggest that the heterogeneity in OFDI is the result of the institutional environment and the strategic priorities of the industry sector. Highlights: In terms of OFDI policies, the Chinese government has more forceful policies but the Indian government has a more laissez faire approach. More Chinese MNEs go to politically friendly nations, but Indian MNEs have a greater proportion in countries with distant political relationships. More Chinese MNEs go to the emerging market nations, but Indian MNEs have a higher proportion in advanced countries.