Management International Review

, Volume 58, Issue 6, pp 911–933 | Cite as

Is the Strategic Asset Seeking Investment Proclivity of Chinese MNEs Different to that of Developed Market MNEs? A Comparative Analysis of Location Choice and Orientation

  • Dylan Sutherland
  • John Anderson
  • Peter Hertenstein
Research Article


Do emerging market MNEs acquire strategic assets in psychically distant developed markets to augment the firm-specific advantages they lack? This question is central to current conceptual discussion of their FDI strategies. To date, however, empirical testing has focused on emerging market MNE FDI location choices in isolation to indirectly infer facts about strategic asset seeking orientation. There are two weaknesses with this approach. First, comparative analysis with developed market MNEs is limited. Second, the focus on geographical location choices does not account for important direct, firm-level evidence on the strategic assets found in foreign subsidiaries. To address these gaps, we first undertake a comparative location choice study of Chinese MNE and developed market MNE FDI in the US. Second, we test corresponding firm-level US subsidiary data using logit modelling to explore whether there are differences between Chinese and developed market MNEs. Our results indicate similarities, rather than differences, in the strategic asset seeking behavior of Chinese and developed market MNEs. This calls into question whether theoretical extension is necessary to explain the behavior of emerging market MNEs as well as the value of indirect, location choice approaches to the analysis of strategic asset seeking FDI.


China Outward FDI Location choice Emerging market Developed economy Comparative study 



This research was made possible thanks to the generous support of the John Deere Foundation.


  1. Alon, T. (2010). Institutional analysis and the determinants of Chinese FDI. Multinational Business Review, 18(3), 1–11.CrossRefGoogle Scholar
  2. Amighini, A., Rabellotti, R., & Sanfilippo, M. (2013). Do Chinese state-owned and private enterprises differ in their internationalization strategies? China Economic Review, 27, 312–325.CrossRefGoogle Scholar
  3. Anderson, J., & Sutherland, D. (2015a). Developed economy investment promotion agencies and emerging market foreign direct investment: The case of Chinese FDI in Canada. Journal of World Business, 50(4), 815–825.CrossRefGoogle Scholar
  4. Anderson, J., & Sutherland, D. (2015b). Entry mode and emerging market Mnes: An analysis of Chinese Greenfield and acquisition Fdi in the United States. Research in International Business and Finance, 35, 88–103.CrossRefGoogle Scholar
  5. Anderson, J., Sutherland, D., & Severe, S. (2015). An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets. International Business Review, 24(5), 758–771.CrossRefGoogle Scholar
  6. Beugelsdijk, S., Hennart, J.-F., Slangen, A., & Smeets, R. (2010). Why and how FDI stocks are a biased measure of MNE affiliate activity. Journal of International Business Studies, 41(9), 1444–1459.CrossRefGoogle Scholar
  7. Buckley, P. J., Clegg, L. J., Cross, A. R., Liu, X., Voss, H., & Zheng, P. (2007). The determinants of Chinese outward foreign direct investment. Journal of International Business Studies, 38(4), 499–518.CrossRefGoogle Scholar
  8. Buckley, P. J., Sutherland, D., Voss, H., & El-Gohair, A. (2015). The economic geography of offshore incorporation in tax havens and offshore financial centres: The case of Chinese MNEs. Journal of Economic Georgraphy, 15(1), 103–128.CrossRefGoogle Scholar
  9. Child, J., & Rodrigues, S. B. (2005). The internationalization of Chinese firms: A case for theoretical extension? Management and Organization Review, 1(3), 381–410.CrossRefGoogle Scholar
  10. Coughlin, C. C. (2012). Extensive and intensive trade margins: A state-by-state view. Federal Reserve Bank Working Paper (pp. 1–60).Google Scholar
  11. Criscuolo, P. (2009). Inter-firm reverse technology transfer: The home country effect of R&D internationalization. Industrial and Corporate Change, 18(5), 869–899.CrossRefGoogle Scholar
  12. Cuervo-Cazurra, A. (2012). Extending theory by analyzing developing country multinational companies: Solving the Goldilocks debate. Global Strategy Journal, 2(3), 153–167.CrossRefGoogle Scholar
  13. Cui, L., & Jiang, F. (2012). State ownership effect on firms’ FDI ownership decisions under institutional pressure: A study of Chinese outward-investing firms. Journal of International Business Studies, 43(3), 264–284.CrossRefGoogle Scholar
  14. Deng, P. (2009). Why do Chinese firms tend to acquire strategic assets in international expansion? Journal of World Business, 44(1), 74–84.CrossRefGoogle Scholar
  15. Dunning, J. H. (2009). Location and the multinational enterprise: A neglected factor? Journal of International Business Studies, 40(1), 5–19.CrossRefGoogle Scholar
  16. Hennart, J.-F. (2012). Emerging market multinationals and the theory of the multinational enterprise. Global Strategy Journal, 2(3), 168–187.CrossRefGoogle Scholar
  17. Hertenstein, P., Sutherland, D., & Anderson, J. (2017). Internationalization within networks: Exploring the relationship between inward and outward FDI in China’s auto components industry. Asia Pacific Journal of Management, 34(1), 69–96.CrossRefGoogle Scholar
  18. Huang, Y., & Wang, B. (2013). Investing overseas without moving factories abroad: The case of Chinese outward direct investment. Asian Development Review, 30(11), 85–107.CrossRefGoogle Scholar
  19. Hurst, L. (2011). Comparative analysis of the determinants of China’s state-owned outward direct investment in OECD and non-OECD countries. China and World Economy, 19(4), 74–91.CrossRefGoogle Scholar
  20. Jindra, B., Hassan, S. S., & Cantner, U. (2016). What does location choice reveal about knowledge-seeking strategies of emerging market multinationals in the EU? International Business Review, 25(1), 204–220.CrossRefGoogle Scholar
  21. Jones, C., & Temouri, Y. (2014). What determines tax haven “FDI”. Academy of Management Proceedings, 45, 1–46.Google Scholar
  22. Kang, Y., & Jiang, F. (2012). FDI location choice of Chinese multinationals in East and Southeast Asia: Traditional economic factors and institutional perspective. Journal of World Business, 47(1), 45–53.CrossRefGoogle Scholar
  23. Kedia, B., Gaffney, N., & Clampit, J. (2012). EMNEs and knowledge-seeking FDI. Management International Review, 52(2), 155–173.CrossRefGoogle Scholar
  24. Lu, J., Liu, X., & Wang, H. (2011). Motives for outward FDI of Chinese private firms: Firm resources, industry dynamics, and government policies. Management and Organization Review, 7(2), 223–248.CrossRefGoogle Scholar
  25. Luo, Y., & Tung, R. L. (2007). International expansion of emerging market enterprises: A Springboard perspective. Journal of International Business Studies, 38(4), 481–498.CrossRefGoogle Scholar
  26. Luo, Y., Xue, Q., & Han, B. (2010). How emerging market governments promote outward FDI: Experience from China. Journal of World Business, 45(1), 68–79.CrossRefGoogle Scholar
  27. Makino, S., Lau, C.-M., & Yeh, R.-S. (2002). Asset-exploitation versus asset-seeking: Implications for foreign location choice of foreign direct investment from newly industrialized economies. Journal of International Business Studies, 33(3), 403–421.CrossRefGoogle Scholar
  28. Mathews, J. A. (2002). Dragon multinational: A new model of global growth (1st ed.). New York: Oxford University Press.Google Scholar
  29. Mathews, J. A. (2006). Dragon multinationals: New players in 21st century globalization. Asia Pacific Journal of Management, 23(1), 5–27.CrossRefGoogle Scholar
  30. Narula, R. (2012). Do we need different frameworks to explain infant MNEs from developing countries? Global Strategy Journal, 2(3), 188–204.CrossRefGoogle Scholar
  31. Nolan, P. (2012). Is China Buying the World (1st ed.). Cambridge: Polity.Google Scholar
  32. Petersen, B., & Seifert, R. (2014). Strategic asset seeking by EMNEs: A matter of liabilities of foreignness—or outsidership? In Progress in International Business Research (pp. 375–398).Google Scholar
  33. Ramamurti, R. (2012). What is really different about emerging market multinationals? Global Strategy Journal, 47, 41–47.CrossRefGoogle Scholar
  34. Ramasamy, B., Yeung, M., & Laforet, S. (2012). China’s outward foreign direct investment: Location choice and firm ownership. Journal of World Business, 47(1), 17–25.CrossRefGoogle Scholar
  35. Rodríguez, C., & Bustillo, R. (2011). A critical revision of the empirical literature on Chinese outward investment: A new proposal. Panoeconomicus, 58(5), 715–733.CrossRefGoogle Scholar
  36. Rugman, A. M., & Li, J. (2007). Will China’s multinationals succeed globally or regionally? European Management Journal, 25(5), 333–343.CrossRefGoogle Scholar
  37. Rui, H., & Yip, G. S. (2008). Foreign acquisitions by Chinese firms: A strategic intent perspective. Journal of World Business, 43(2), 213–226.CrossRefGoogle Scholar
  38. Sun, S. L., Peng, M. W., Ren, B., & Yan, D. (2012). A comparative ownership advantage framework for cross-border M&As: The rise of Chinese and Indian MNEs. Journal of World Business, 47(1), 4–16.CrossRefGoogle Scholar
  39. Sutherland, D., & Anderson, J. (2015). The pitfalls of using foreign direct investment data to measure Chinese multinational enterprise activity. The China Quarterly, 2015, 1–28.Google Scholar
  40. Tan, H., & Mathews, J. (2015). Accelerated internationalization and resource leverage strategizing: The case of Chinese wind turbine manufacturers. Journal of World Business, 50(3), 417–427.CrossRefGoogle Scholar
  41. UNCTAD. (2013). World Investment Report 2013.
  42. Verbeke, A., & Kano, L. (2015). The new internalization theory and multinational enterprises from emerging economies: A business history perspective. Business History Review, 89(3), 415–445.CrossRefGoogle Scholar
  43. Wang, C., Hong, J., Kafouros, M., & Wright, M. (2012). Exploring the role of government involvement in outward FDI from emerging economies. Journal of International Business Studies, 43(7), 655–676.CrossRefGoogle Scholar
  44. Wang, Z., & Yu, Z. (2012). Trading partners, traded products and firm performances of China’s exporter-importers: Does processing trade make a difference? World Economy, 35(12), 1795–1824.CrossRefGoogle Scholar
  45. Wooldridge, J. (2002). Quasi-likelihood methods for count data. In P. K. Trivedi (Ed.), Regression analysis of count data (2nd ed., pp. 1–566). New York: Cambridge University Press.Google Scholar
  46. Yao, S., Sutherland, D., & Chen, J. (2010). China’s outward FDI and resource-seeking strategy: A case study on Chinalco and Rio Tinto. Asia-Pacific Journal of Accounting and Economics, 17, 313–326.CrossRefGoogle Scholar
  47. Yiu, D. W. (2011). Multinational advantages of Chinese business groups: A theoretical exploration. Management and Organization Review, 7(2), 249–277.CrossRefGoogle Scholar
  48. Zhou, C., Delios, A., & Yang, J. (2002). Locational determinants of Japanese foreign direct investment in China. Asia Pacific Journal of Management, 19(1), 63–86.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  • Dylan Sutherland
    • 1
  • John Anderson
    • 2
  • Peter Hertenstein
    • 3
  1. 1.Durham UniversityDurhamUK
  2. 2.University of Northern IowaCedar FallsUSA
  3. 3.University of CambridgeCambridgeUK

Personalised recommendations