《国际投资》课程教学资源（书籍文献）Chinese Outward Direct Investment Research - Theoretical Integration and Recommendations

暖 Management and md Organization:3,November 2013.513-539 doi10.1111/moe12030 理组 研猷 究管 Chinese Outward Direct Investment Research: Theoretical Integration and Recommendations Ping Deng(邓平) Cleveland State University,USA ABSTRAcr This article reports a detailed analysis of 138 peer-reviewed articles in 41 journals published in the last 12 years(2001-2012)that focus on Chinese outward foreign direct investment from a theoretical advancement perspective.It assesses how the topic has been explored both conceptually and empirically and identifies the substantive contributions to the literature using a thematic analysis.The article argues that research on the international expansion of Chinese multinational corporations offers a unique opportunity to extend and develop extant theorizing in four primary research muences;the ty of foreignn Building on n the results ticle offer as promis sng ways eoretical inquiry.(1) among tn kEYwoRps Chinese multinational corporations (NCs).cross-border mergers and acquisitions (M&As),international expansion,outward foreign direct investment (OFDD theoretical advancement 通过研究中国对外投资发展理论：现实与建议 摘要 本研究从理论发展视角.详细分析了过去12年 2在不同领域里集中研究中 将资的 主要理论和实证研究结果进行了评估，从而发据出对更广泛文献的实质性贡献】 总结认为研究中国跨国企业国际扩展，为四大领域的理论延伸和发展提供了独特的机 会：迟来者观点、中国国家和政府的影响、创业者与制度的动态关系、以及外来者的 不利条件。基于综合回顾与分析，并以理论延伸和拓展为宗旨，本文指出了未来五个 研究方向可为深入进行理论探讨开辟新的路径：（山）对现有四大领域的研究进行交叉探 索，（②把资源和制度理论与其他理论有机结合，(3运用跟踪纵向法对国际化过程进行 更多的探究，④采用多层次分析方法，（⑤）更加重视与其他新兴市场体的比较研究。 关键词：中国跨国公司，跨国并购，国际扩展，对外直接投资，理论发展 e 2013 The International Association for Chinese Management Research

Chinese Outward Direct Investment Research: Theoretical Integration and Recommendations Ping Deng (邓平) Cleveland State University, USA ABSTRACT This article reports a detailed analysis of 138 peer-reviewed articles in 41 journals published in the last 12 years (2001–2012) that focus on Chinese outward foreign direct investment from a theoretical advancement perspective. It assesses how the topic has been explored both conceptually and empirically and identifies the substantive contributions to the literature using a thematic analysis. The article argues that research on the international expansion of Chinese multinational corporations offers a unique opportunity to extend and develop extant theorizing in four primary research streams: the latecomer perspective; Chinese state and government influences; the dynamics of firms and institutions; and the liability of foreignness. Building on the results of this analysis, the article offers five recommendations as promising ways to open up theoretical inquiry: (1) cross-fertilization among the four research streams; (2) integration of resource- and institution-based theories with other theoretical lenses; (3) research on the process dimensions using a longitudinal approach; (4) adoption of multi-levels of analysis; and (5) consideration of the wider emerging market literature. KEYWORDS Chinese multinational corporations (MNCs), cross-border mergers and acquisitions (M&As), international expansion, outward foreign direct investment (OFDI), theoretical advancement 通过研究中国对外投资发展理论: 现实与建议 摘要 本研究从理论发展视角, 详细分析了过去12年 (2001–2012) 在不同领域里集中研究中 国对外直接投资的138篇学术期刊文章。应用主题分析法, 作者对如何研究该题目的 主要理论和实证研究结果进行了评估, 从而发掘出对更广泛文献的实质性贡献。本文 总结认为研究中国跨国企业国际扩展, 为四大领域的理论延伸和发展提供了独特的机 会: 迟来者观点、中国国家和政府的影响、创业者与制度的动态关系、以及外来者的 不利条件。基于综合回顾与分析, 并以理论延伸和拓展为宗旨, 本文指出了未来五个 研究方向可为深入进行理论探讨开辟新的路径: (1) 对现有四大领域的研究进行交叉探 索, (2) 把资源和制度理论与其他理论有机结合, (3) 运用跟踪纵向法对国际化过程进行 更多的探究, (4) 采用多层次分析方法, (5) 更加重视与其他新兴市场体的比较研究。 关键词：中国跨国公司，跨国并购，国际扩展，对外直接投资，理论发展 bs_bs_banner Management and Organization Review 9:3, November 2013, 513–539 doi: 10.1111/more.12030 © 2013 The International Association for Chinese Management Research

514 P.Deng INTRODUCTION China's internationalization,one of the most profound business phenomena of the last decade (Economist,2010),is occurring in different forms.In particular,its outward foreign direct investment(OFDI)has grown exponentially to the point where China is now one of the world's largest investors with a cumulated FDI stock ofover S500billion by 2012(MOC.2012:UNCTAD.2013).As Chinamoves to the centre of the global economy,research on the internationalization of Chinese multinational corporations (MNCs)has gained importance because China offers particularly good test case for the general theory of FDI(Buckley,Clegg,Cross,Liu. Voss,Zheng,2007:500).Despite rapidly developing research on the topic,the literature on the internationalization of Chinese firms has been fragmented and lacks theoretical integration Using content analysis,Deng(2012)reviewed conceptual and empirical articles from 1991 to 2010,focusing on the antecedents,processes,and outcomes of the internationalization of Chinese firms,offering insights into several content areas critically needing further development.That study,however,did not explore th theoretical implications of the internationalization of Chinese firms,specifically OFDI.Chinese internationalization presents unique features,and provides oppor- tunities to extend existing theories and potentially develop new theories on the systematically analyzes the literature published in the last 12 years (2001-2012) from a theoretical advancement perspective and suggests how the study of Chinese OFDI could become a major driver of theoretical development,advancing the scholarship on the internationalization of Chinese firms. Four primary research themes assembled by scholars are adopted (see.e.g. Buckley et al.,2007;Child Rodrigues,2005;Ramamurti Singh,2009):(a)the omer perspective;(b)Chin of firms and institutions;and(d)the liability of foreignness.Representative rather than exhaustive works are used to illustrate how concepts and theoretical lenses are applied and/or extended to each theme.The review is approached from an integrative,process-focused,dynamic perspective nested within knowledge and multilevel analysis.integrating previous research and offering direc- tions for future research.The core research question asked is this:how have researchers explored Chinese internationalization through OFDI in terms of theo retical extension and development? MAPPING THE STATUS OF CHINESE INTERNATIONALIZATION RESEARCH Method of Article Selection The article focuses on English-language peer-reviewed articles and excludes books, edited volumes,introductions,editorials,and other non-refereed publications.This 2013 The International Asociation for Chinese Management Research

INTRODUCTION China’s internationalization, one of the most profound business phenomena of the last decade (Economist, 2010), is occurring in different forms. In particular, its outward foreign direct investment (OFDI) has grown exponentially to the point where China is now one of the world’s largest investors with a cumulated FDI stock of over $500 billion by 2012 (MOC, 2012; UNCTAD, 2013). As China moves to the centre of the global economy, research on the internationalization of Chinese multinational corporations (MNCs) has gained importance because China offers ‘a particularly good test case for the general theory of FDI’ (Buckley, Clegg, Cross, Liu, Voss, & Zheng, 2007: 500). Despite rapidly developing research on the topic, the literature on the internationalization of Chinese firms has been fragmented and lacks theoretical integration. Using content analysis, Deng (2012) reviewed conceptual and empirical articles from 1991 to 2010, focusing on the antecedents, processes, and outcomes of the internationalization of Chinese firms, offering insights into several content areas critically needing further development. That study, however, did not explore the theoretical implications of the internationalization of Chinese firms, specifically OFDI. Chinese internationalization presents unique features, and provides oppor￾tunities to extend existing theories and potentially develop new theories on the internationalization of firms and FDI (Child & Rodrigues, 2005). This article systematically analyzes the literature published in the last 12 years (2001–2012) from a theoretical advancement perspective and suggests how the study of Chinese OFDI could become a major driver of theoretical development, advancing the scholarship on the internationalization of Chinese firms. Four primary research themes assembled by scholars are adopted (see, e.g., Buckley et al., 2007; Child & Rodrigues, 2005; Ramamurti & Singh, 2009): (a) the latecomer perspective; (b) Chinese state and government influences; (c) the dynamics of firms and institutions; and (d) the liability of foreignness. Representative rather than exhaustive works are used to illustrate how concepts and theoretical lenses are applied and/or extended to each theme. The review is approached from an integrative, process-focused, dynamic perspective nested within cross-disciplinary knowledge and multilevel analysis, integrating previous research and offering direc￾tions for future research. The core research question asked is this: how have researchers explored Chinese internationalization through OFDI in terms of theo￾retical extension and development? MAPPING THE STATUS OF CHINESE INTERNATIONALIZATION RESEARCH Method of Article Selection The article focuses on English-language peer-reviewed articles and excludes books, edited volumes, introductions, editorials, and other non-refereed publications. This 514 P. Deng © 2013 The International Association for Chinese Management Research

Advancing Theories from Chinese OFDI 515 is because,in recent years,journal articles have had the most impact in the field (Bruton Lau,2008;Tsui,Nifadkar,Ou,2007).In addition, articles had to address Thus,all online publications as of luly 2012 were also included.Finally,the review focuses on Chinese outward direct investment,primarily through cross-border m AeratrecahascodtC d using keywords via three major databases(ABI/INFORM,Academic Search Elite,and Business Source Com- plete):this was supplemented by a manual perusal of all issues of the relevant journals.The keyv expansion,globalization/internationalization,and cross-border mergers and acquisitions MAs),in journal titles,abstracts,and keywords.The relevant articles were then read carefully to ensure that they were in SSCI-indexed journals and other quality jourals with rigorous peer review processes.Finally,138 articles appearing mainly in SSCI-indexed journals across various research disciplines that fit our definition of research on Chinese outward investment were identifed. The target articles were classified into three categories(left portion of Table 1). First,appeared in nine top busines and management the 210 impact factor of 1.50 was used as the cut-off point.Second.55 articles appeared in other business and management journals;their 2010 impact factors were lower than 1.50.Finally,there were 44 articles in other international and area study journals.Table I shows that the number of publications increased sharply in recent years;87%of the publications(i.e.,120 articles)were published in the last six years, indicating increasing interest in this topic.Appendix I lists the articles by author name in each category of journal. The 138 articles were also organiszed according to their research methods(right portion of Table 1).The 78 empirical articles include 57 quantitative studies;24 use survey or questionnaire data mainly at the firm level:33 use archival (primarily cross-sectional)datasets at a country or industry level,using official Chinese gov- ernment aggregate data,Thomson Financial SDC database,or the cross-border M&As by listed firms in the Shanghai and Shenzhen Stock Exchanges.For the 21 qualitative empirical works,most use multiple cases or in-depth case studies and eon prominent Chinese companies such as Haier,Lenovo,TCL,and u Ntost of the 6o conceptual or perpective paper n e and international journals.They tend to focus on the macroeconomic analysis of Chinese OFDI trends and patterns and particularly in host countries such as the U.S.and African countries Chinese OFDI and the Latecomer Perspective Studies have examined why Chinese firms use catch-up strategies,particularly resource-based theory (RBT),which offers an externally focused perspective of 2013 The International Association for Chinese Management Research

is because, in recent years, journal articles have had the most impact in the field (Bruton & Lau, 2008; Tsui, Nifadkar, & Ou, 2007). In addition, articles had to address issues of Chinese internationalization at different levels of analysis. Thus, all online publications as of July 2012 were also included. Finally, the review focuses on Chinese outward direct investment, primarily through cross-border mergers and acquisitions (M&As) and greenfield investment. A literature search was conducted using keywords via three major electronic databases (ABI/INFORM, Academic Search Elite, and Business Source Com￾plete); this was supplemented by a manual perusal of all issues of the relevant journals. The keywords included China, Chinese firms/companies/MNCs, international expansion, globalization/internationalization, and cross-border mergers and acquisitions (M&As), in journal titles, abstracts, and keywords. The relevant articles were then read carefully to ensure that they were in SSCI-indexed journals and other quality journals with rigorous peer review processes. Finally, 138 articles appearing mainly in SSCI-indexed journals across various research disciplines that fit our definition of research on Chinese outward investment were identified. The target articles were classified into three categories (left portion of Table 1). First, 39 articles appeared in nine top business and management journals; the 2010 impact factor of 1.50 was used as the cut-off point. Second, 55 articles appeared in other business and management journals; their 2010 impact factors were lower than 1.50. Finally, there were 44 articles in other international and area study journals. Table 1 shows that the number of publications increased sharply in recent years; 87% of the publications (i.e., 120 articles) were published in the last six years, indicating increasing interest in this topic. Appendix I lists the articles by author name in each category of journal. The 138 articles were also organiszed according to their research methods (right portion of Table 1). The 78 empirical articles include 57 quantitative studies; 24 use survey or questionnaire data mainly at the firm level; 33 use archival (primarily cross-sectional) datasets at a country or industry level, using official Chinese gov￾ernment aggregate data, Thomson Financial SDC database, or the cross-border M&As by listed firms in the Shanghai and Shenzhen Stock Exchanges. For the 21 qualitative empirical works, most use multiple cases or in-depth case studies and concentrate on prominent Chinese companies such as Haier, Lenovo, TCL, and Huawei. Most of the 60 conceptual or perspective papers appear in cross-cultural and international journals. They tend to focus on the macroeconomic analysis of Chinese OFDI trends and patterns and particularly in host countries such as the U.S. and African countries. Chinese OFDI and the Latecomer Perspective Studies have examined why Chinese firms use catch-up strategies, particularly resource-based theory (RBT), which offers an externally focused perspective of Advancing Theories from Chinese OFDI 515 © 2013 The International Association for Chinese Management Research

516 P.Deng -100 'IdAO NN一N二NN字 6一61-的n的±的3 n中n 磊美美嘉美美美美昌 2013 The International Asociation for Chinese Management Research

Table 1. Journal articles and research methodology on Chinese OFDI, 2001–2012 Year Top business & management journals Other business & management journals International & area study journals Subtotal Quantitative studies (survey or archival data) Qualitative studies (single or multiple cases) Conceptual or overview studies 2001 2 2 2 2002 2 2 4 1 3 2003 1 1 1 3 1 2 2004 2 2 4 1 3 2005 1 1 2 1 1 2006 3 3 3 2007 6 3 3 12 5 2 5 2008 5 3 3 11 4 1 6 2009 5 8 11 24 10 4 10 2010 4 14 2 20 10 3 7 2011 5 7 14 26 11 4 11 2012† 12 13 2 27 16 4 7 Total 39 55 44 138 57 (24 survey data; 33 archival data) 21 (6 single cases; 15 multiple cases) 60 † As of July 2012, including all the online publications. 516 P. Deng © 2013 The International Association for Chinese Management Research

Advancing Theories from Chinese OFDI 517 how Chinese firms address their competitive disadvantages and the strategies they employ to do so (Deng,2007;Hong Sun,2006).Chinese MNCs aim to overcome latecomer disadvantages'via aggressive acquisition of 'critical assets from mature MNEs to compensate for their competitive weakness'(Luo Tung. 2007:481).To compensate for their competitive weaknesses,Chinese MNCs have set upR&D centres in high-income countries to assist in developing technologically advanced knowledge-intensive products manufactured in China (Bonaglia, Goldstein,Mathews,2007;Di Minin,Zhang,Gammeltoft,2012).They have also exploited home country-specific advantages(CSAs)to build knowledge-based firm-specific advantages(FSAs)by seeking br nds,distribution networks,technol- ogy,management,and strategy skills missing in Chinese firms (Rugman&Li, 2007).Such strategic asset-seeking FDI is orchestrated mostly through large state- controlled business groups and is well informed by in-depth case studies of some high -profile Chinese firms,including Haier,Lenovo H ei,Galanz,BOE,and TCL (see,e.g.,Duysters,Jacob,Lemmens,Yu,2009;Ge Ding,2008;Li Kozhikode,2011;Sun,2009). Empirical research largely supports rationales predicting the likelihood of Chinese overseas M&As and asset-seeking motivations.Chinese MNCs undertake cross-border M&A activities directly to seek needed ownership advantages(Huang Wang,2011;Zou Ghauri,2010),and reposition themselves strategically to close compe ps through organizational learning and/or capability building CardoaFome.2011:Wlamson&Raman.2011).In the same vein.Chines firms are able to catch up and compress the 'time space'that would have elapsed without organizational and technological transfers (Warner,Ng,Xu,2004). In terms of entry mode choices,Chinese firms emphasize stra intent more strongly than strategic fit,thus accelerating international activities via overseas acquisition (Cui Jiang,2009a,2010). However,other research has tempered support for RBT predictions of catch-up strategies by showing that asset acquisitions are not the sole determinants of Chinese overseas M&As.Other important considerations include the firm's his- torical context(Buckley,Cross,Tan,Liu,Voss,2008),home market exploitation (Huang Wang,2011),industry environment(Taylor,2002),prevailing institu- tional norms(Yuan Pangarkar,2010),corporate diversification (Cheung &Qian, 2009),entrepreneurial orientation (Liu,L.Xue,2011),and absorptive capacities (Deng,2010).For example,most publications in this area study and international journals argue that Chinese OFDI reflects the dynamics of investment strategies actively respond ing to globalization's challenges and opportunities(see,e.g.,Ning 2009;Wong Chan,2003).Moreover,OFDI expansion appears closely linked to China's expansion as a trading nation (Frost,2004;Liu,Buck,Shu,2005). Consequently,scholars argue that future studies may specify and test a compre hensive empirical model that considers all possible structural and cyclical factors in explaining the variance in Chinese OFDI flows(see,e.g.,Tolentino,2010).In 2013 The International Association for Chinese Management Research

how Chinese firms address their competitive disadvantages and the strategies they employ to do so (Deng, 2007; Hong & Sun, 2006). Chinese MNCs aim to overcome ‘latecomer disadvantages’ via aggressive acquisition of ‘critical assets from mature MNEs to compensate for their competitive weakness’ (Luo & Tung, 2007: 481). To compensate for their competitive weaknesses, Chinese MNCs have set up R&D centres in high-income countries to assist in developing technologically advanced, knowledge-intensive products manufactured in China (Bonaglia, Goldstein, & Mathews, 2007; Di Minin, Zhang, & Gammeltoft, 2012). They have also exploited home country-specific advantages (CSAs) to build knowledge-based firm-specific advantages (FSAs) by seeking brands, distribution networks, technol￾ogy, management, and strategy skills missing in Chinese firms (Rugman & Li, 2007). Such strategic asset-seeking FDI is orchestrated mostly through large state￾controlled business groups and is well informed by in-depth case studies of some high-profile Chinese firms, including Haier, Lenovo, Huawei, Galanz, BOE, and TCL (see, e.g., Duysters, Jacob, Lemmens, & Yu, 2009; Ge & Ding, 2008; Li & Kozhikode, 2011; Sun, 2009). Empirical research largely supports rationales predicting the likelihood of Chinese overseas M&As and asset-seeking motivations. Chinese MNCs undertake cross-border M&A activities directly to seek needed ownership advantages (Huang & Wang, 2011; Zou & Ghauri, 2010), and reposition themselves strategically to close competitive gaps through organizational learning and/or capability building (Cardoza & Fornes, 2011; Williamson & Raman, 2011). In the same vein, Chinese firms are able to catch up and compress the ‘time space’ that would have elapsed without organizational and technological transfers (Warner, Ng, & Xu, 2004). In terms of entry mode choices, Chinese firms emphasize strategic intent more strongly than strategic fit, thus accelerating international activities via overseas acquisition (Cui & Jiang, 2009a, 2010). However, other research has tempered support for RBT predictions of catch-up strategies by showing that asset acquisitions are not the sole determinants of Chinese overseas M&As. Other important considerations include the firm’s his￾torical context (Buckley, Cross, Tan, Liu, & Voss, 2008), home market exploitation (Huang & Wang, 2011), industry environment (Taylor, 2002), prevailing institu￾tional norms (Yuan & Pangarkar, 2010), corporate diversification (Cheung & Qian, 2009), entrepreneurial orientation (Liu, Li, & Xue, 2011), and absorptive capacities (Deng, 2010). For example, most publications in this area study and international journals argue that Chinese OFDI reflects the dynamics of investment strategies, actively responding to globalization’s challenges and opportunities (see, e.g., Ning, 2009; Wong & Chan, 2003). Moreover, OFDI expansion appears closely linked to China’s expansion as a trading nation (Frost, 2004; Liu, Buck, & Shu, 2005). Consequently, scholars argue that future studies may specify and test a compre￾hensive empirical model that considers all possible structural and cyclical factors in explaining the variance in Chinese OFDI flows (see, e.g., Tolentino, 2010). In Advancing Theories from Chinese OFDI 517 © 2013 The International Association for Chinese Management Research

518 P.Deng addition,RBTpredictive power may depend on the comparative resource endow- ments of Chinese investors at home and their adaptive capabilities in host country environments,so that some researchers empirically examine the boundaries,allow- ing RBT to predict catch-up strategies (Liang,L,Wang,2012;L,Zhou Bruton,&Li,2010).Finally,international acquisition may have become more prevalent for Chinese firms to strengthen their domestic competitive bases(Luo Wang,2012;Williamson Raman,2011).To the extent that Chinese firms acquire to catch up with well-established competitors,they have the incentive to preserve the target to learn from it.Yet,research is minimal applying the relevan theories of organizational learning for knowledge transfer and capability enhance- ment,which creates opportunities to further refine the latecomer perspective. In short,the lateco mer logic claiming that Chinese firms inte tionalize to address their competitive weaknesses has become so accepted that it is less rigor ously explored and tested than it could be.Thus,a large gap remains in under- standing Chinese strategies in seeking assets and the implications for theoretical perspective has failed to fully predict or explain Chinese OFDI and the Role of Government and State Multinationals from emerging economies are constrained by institutional contexts of state interference,piecemeal economic reform,and gradual institutional evolu- tion (Tsui,Schoonhoven,Meyer,Lau,Milkovich,2004).The process of inter- nationalization of Chinese firms 'strongly suggests that international business theory needs to take fuller account of the potential relevance of domestic institu- tional factors'(Child Rodrigues,2005:404).However,government's institu- tional role does not differentiate clearly the relation of entrepreneurs and does theoretical and emprical works Thi article reconfigures the role of government more broadly to include state owner- ship and influence as the second stream of research to better account for the publications in area study and international journals focusing on the global rel evance of outward investment,particularly by Chinese state-owned enterprises (SOEs). Articles published in the past 12 years have regarded government support as a main driver of Chinese OFDI Using the political economy perspectiv scholars examine why and how Chinese government stimulates OFDI(Deng,2004;Luo. Xue,Han,2010).They argue that OFDI promotion policies are economically imperative and institutionally complementary to offsetting the competitive weak- ness of Chinese MNCs in global competition.Chinese acquiring firms differed in ownership but all benefited significantly from government support at critical stages in their international efforts and their asset acquisition(Wang,2002;Warner et al.,2004).China's huge foreign exchange reserves,which by the end of 2012 had 2013 The International Asociation for Chinese Management Research

addition, RBT predictive power may depend on the comparative resource endow￾ments of Chinese investors at home and their adaptive capabilities in host country environments, so that some researchers empirically examine the boundaries, allow￾ing RBT to predict catch-up strategies (Liang, Lu, & Wang, 2012; Lu, Zhou, Bruton, & Li, 2010). Finally, international acquisition may have become more prevalent for Chinese firms to strengthen their domestic competitive bases (Luo & Wang, 2012; Williamson & Raman, 2011). To the extent that Chinese firms acquire to catch up with well-established competitors, they have the incentive to preserve the target to learn from it. Yet, research is minimal applying the relevant theories of organizational learning for knowledge transfer and capability enhance￾ment, which creates opportunities to further refine the latecomer perspective. In short, the latecomer logic claiming that Chinese firms internationalize to address their competitive weaknesses has become so accepted that it is less rigor￾ously explored and tested than it could be. Thus, a large gap remains in under￾standing Chinese strategies in seeking assets and the implications for theoretical extensions. After all, the latecomer perspective has failed to fully predict or explain Chinese MNC international activities. Chinese OFDI and the Role of Government and State Multinationals from emerging economies are constrained by institutional contexts of state interference, piecemeal economic reform, and gradual institutional evolu￾tion (Tsui, Schoonhoven, Meyer, Lau, & Milkovich, 2004). The process of inter￾nationalization of Chinese firms ‘strongly suggests that international business theory needs to take fuller account of the potential relevance of domestic institu￾tional factors’ (Child & Rodrigues, 2005: 404). However, government’s institu￾tional role does not differentiate clearly the relation of entrepreneurs and institutions, nor does it account for recent theoretical and empirical works. This article reconfigures the role of government more broadly to include state owner￾ship and influence as the second stream of research to better account for the publications in area study and international journals focusing on the global rel￾evance of outward investment, particularly by Chinese state-owned enterprises (SOEs). Articles published in the past 12 years have regarded government support as a main driver of Chinese OFDI. Using the political economy perspective, scholars examine why and how Chinese government stimulates OFDI (Deng, 2004; Luo, Xue, & Han, 2010). They argue that OFDI promotion policies are economically imperative and institutionally complementary to offsetting the competitive weak￾ness of Chinese MNCs in global competition. Chinese acquiring firms differed in ownership but all benefited significantly from government support at critical stages in their international efforts and their asset acquisition (Wang, 2002; Warner et al., 2004). China’s huge foreign exchange reserves, which by the end of 2012 had 518 P. Deng © 2013 The International Association for Chinese Management Research

Advancing Theories from Chinese OFDI 519 surged to $3.5 trillion,also facilitate government support,leading to rising state- controlled investments(Cheung Qian,2009).The state influence is evident in that the majority of China's OFDI is conducted by SOEs,accou ng for approxi- mately 80%of Chinese cumulative investment stock (UNCTAD.2013).State dominance means that a mix of political and commercial interests governs Chinese investment decisions,thus fuelling concern about national security risks for host countries. The dramatic rise in Chinese FDI has sparked intense political,economic,and developmental debates in the global community regarding active state involvement by the thesis of state corp ratism (Sauvant,McAllisteer,&Maschek, 2010:Yeung&Liu,2008).Some scholars argue that the sharp growth of Chinese investment is the outcome of the Chinese state's 'going-out'strategy to serve its national development priorities (Song,Yang,Zhang,2011).Empirical studies show that the Chin nt tend to use its tments as the main channels of commercial and political interactions to build diplomatic bridges across countries and secure goodwill for other projects that might be in China's national interests (Brautigam Tang,2011;Jiang,2009).By analyzing cross- border FDI in the Great Mekong subregion,Su (2012)explores how the Chines state rescales to implement the go-out strategy and provides a good example of the political-economic restructuring of national states in producing new spaces of development for its landlocked Yunnan Province.Most researchers argue that investment by Chinese firms with support and subsidies from theirdevelopmental state'provides a promising new approach to sustainable industrialization,particu- larly in Africa(see,e.g.,Biggeri Sanfilippo,2009;Brautigam,2009).On the other hand,som scholars ntend that the economic and political context sur- rounding Chinese FDI undermines the effectiveness of environmental and social regulation in the host countries(see,e.g.,Haglund,2008;Sautman Yan,2008). China's OFDI is a complex phenomenon incorporating numerous economic and political dimensions,thereby generating location patt erns that are not neces sarily for profit maximization (Kang Jiang,2012;Liou,2009;Ramasamy, Yeung,Laforet,2012).Chinese SOEs are often attracted to countries with great natural resources (Duanmu,2012;Kolstad Wiig,2012).Compared with peers who lack controlling state equity,Chinese SOEs are less concerned about the political risk of the host country and are more responsive to favourable exchange rates(Voss,Buckley,Cross,2010).As SOEs appear to pursue complex and costly in explaining Chinese OFDI with strong state ownership and involvement(Al Chang,Fetscherin,Lattemann,McIntyre,2009;Quer,Claver,Rienda,2012). In considering the government's role in Chinese internationalization,institu- tional theory dominates.The role of the Chinese government in promoting and enabling OFDI essentially reflects institutional entrepreneurship.To expand current theorizing,institutional studies could incorporate the political-economic 2013 The International Association for Chinese Management Research

surged to $3.5 trillion, also facilitate government support, leading to rising state￾controlled investments (Cheung & Qian, 2009). The state influence is evident in that the majority of China’s OFDI is conducted by SOEs, accounting for approxi￾mately 80% of Chinese cumulative investment stock (UNCTAD, 2013). State dominance means that a mix of political and commercial interests governs Chinese investment decisions, thus fuelling concern about national security risks for host countries. The dramatic rise in Chinese FDI has sparked intense political, economic, and developmental debates in the global community regarding active state involvement envisioned by the thesis of state corporatism (Sauvant, McAllisteer, & Maschek, 2010; Yeung & Liu, 2008). Some scholars argue that the sharp growth of Chinese investment is the outcome of the Chinese state’s ‘going-out’ strategy to serve its national development priorities (Song, Yang, & Zhang, 2011). Empirical studies show that the Chinese government tends to use its investments as the main channels of commercial and political interactions to build diplomatic bridges across countries and secure goodwill for other projects that might be in China’s national interests (Brautigam & Tang, 2011; Jiang, 2009). By analyzing cross￾border FDI in the Great Mekong subregion, Su (2012) explores how the Chinese state rescales to implement the go-out strategy and provides a good example of the political–economic restructuring of national states in producing new spaces of development for its landlocked Yunnan Province. Most researchers argue that investment by Chinese firms with support and subsidies from their ‘developmental state’ provides a promising new approach to sustainable industrialization, particu￾larly in Africa (see, e.g., Biggeri & Sanfilippo, 2009; Brautigam, 2009). On the other hand, some scholars contend that the economic and political context sur￾rounding Chinese FDI undermines the effectiveness of environmental and social regulation in the host countries (see, e.g., Haglund, 2008; Sautman & Yan, 2008). China’s OFDI is a complex phenomenon incorporating numerous economic and political dimensions, thereby generating location patterns that are not neces￾sarily for profit maximization (Kang & Jiang, 2012; Liou, 2009; Ramasamy, Yeung, & Laforet, 2012). Chinese SOEs are often attracted to countries with great natural resources (Duanmu, 2012; Kolstad & Wiig, 2012). Compared with peers who lack controlling state equity, Chinese SOEs are less concerned about the political risk of the host country and are more responsive to favourable exchange rates (Voss, Buckley, & Cross, 2010). As SOEs appear to pursue complex and costly investment initiatives and frequently make risky acquisitions, theories are limited in explaining Chinese OFDI with strong state ownership and involvement (Alon, Chang, Fetscherin, Lattemann, & McIntyre, 2009; Quer, Claver, & Rienda, 2012). In considering the government’s role in Chinese internationalization, institu￾tional theory dominates. The role of the Chinese government in promoting and enabling OFDI essentially reflects institutional entrepreneurship. To expand current theorizing, institutional studies could incorporate the political–economic Advancing Theories from Chinese OFDI 519 © 2013 The International Association for Chinese Management Research

520 P.Deng approach.For a multi-theoretic view of Chinese government and state,researchers need to incorporate resource dependence theory(RDT)to understand the role of government (Hillman,Withers,Collins,2009).State ownership creates the political affiliation of Chinese MNCs with their home country government which increases firms'resource dependence on home country institutions,whil influencing their images as perceived by host country institutional constituents Such resource dependence and political perception could fundamentally shape the investment patterns and motives of Chinese SOEs.Because the prevailing theories focus on privately owned organizations,a fruitful research stream might be to consider how and to what extent Chinese state ownership might advance theories of FDI and firm conduct in the global landscape. Chinese OFDI and the Dynamics of Firms and Institutions Scholars also examine interactions between firms and institutions in shaping the nvesting firms.At this micro eent ho advnc n based arguments with respect to strategic options (see,e.g.,Luo Rui,2009) From this perspective,although the same strategic factors that apply to Western companies may explain the motivation for OFDI by Chinese MNC their strateg choices regarding the pattern of internationalization will be institutionally embed ded (Child Rodrigues,2005). In examining the dynamic interaction between firms and institutions driving Chinese OFDI,scholars have adopted the strategy tripod'framework,whic considers the strategic choices of Chinese MNCs as the outcome of the interplay between institutions and organizations(Peng,2012;Yamakawa,Peng,Deeds 2008).A number of studies e mpirically supp port the s tripod perspective(see egLu,Liu,&Wang,2011;Yang,Jiang,Kang&Ke,2009a)A major advantage of the strategic tripod is that researchers may consider different analysis levels firm,industry,and country-and distinguish among different sources.However, different meas ments of dependent,independent,and gene conflicting empirical findings.Additionally,scholars adopting the strategic tripod lens tend to overemphasize the institutional elements,so the complex interplay between dimensions of strategic choices has been rarely tested rigorously.Without a balanced consideration of the three components,the explanatory power of the strategy tripod perspective could be another version of institutional theory. Responding to domestic market failure in various forms.several scholars have investigated Chinese MNCs for strategic options at the micro firm-level,based on resource e,institution,and transaction cost considerations.For example forma institutional constraints,such as weak intellectual property rights(IPR)and ineffi- cient legal frameworks discourage Chinese firms from pursuing R&D and innova- tion in China.Unable to domestically develop technology,they use OFDI as an 2013 The International Asociation for Chinese Management Research

approach. For a multi-theoretic view of Chinese government and state, researchers need to incorporate resource dependence theory (RDT) to understand the role of government (Hillman, Withers, & Collins, 2009). State ownership creates the political affiliation of Chinese MNCs with their home country government, which increases firms’ resource dependence on home country institutions, while influencing their images as perceived by host country institutional constituents. Such resource dependence and political perception could fundamentally shape the investment patterns and motives of Chinese SOEs. Because the prevailing theories focus on privately owned organizations, a fruitful research stream might be to consider how and to what extent Chinese state ownership might advance theories of FDI and firm conduct in the global landscape. Chinese OFDI and the Dynamics of Firms and Institutions Scholars also examine interactions between firms and institutions in shaping the behaviour, organization, and strategies of Chinese investing firms. At this micro firm-level analysis, management scholars advance both institutional and resource￾based arguments with respect to strategic options (see, e.g., Luo & Rui, 2009). From this perspective, although the same strategic factors that apply to Western companies may explain the motivation for OFDI by Chinese MNCs, their strategic choices regarding the pattern of internationalization will be institutionally embed￾ded (Child & Rodrigues, 2005). In examining the dynamic interaction between firms and institutions driving Chinese OFDI, scholars have adopted the ‘strategy tripod’ framework, which considers the strategic choices of Chinese MNCs as the outcome of the interplay between institutions and organizations (Peng, 2012; Yamakawa, Peng, & Deeds, 2008). A number of studies empirically support the strategy tripod perspective (see, e.g., Lu, Liu, & Wang, 2011; Yang, Jiang, Kang, & Ke, 2009a). A major advantage of the strategic tripod is that researchers may consider different analysis levels – firm, industry, and country – and distinguish among different sources. However, different measurements of dependent, independent, and control variables generate conflicting empirical findings. Additionally, scholars adopting the strategic tripod lens tend to overemphasize the institutional elements, so the complex interplay between dimensions of strategic choices has been rarely tested rigorously. Without a balanced consideration of the three components, the explanatory power of the strategy tripod perspective could be another version of institutional theory. Responding to domestic market failure in various forms, several scholars have investigated Chinese MNCs for strategic options at the micro firm-level, based on resource, institution, and transaction cost considerations. For example, formal institutional constraints, such as weak intellectual property rights (IPR) and ineffi- cient legal frameworks discourage Chinese firms from pursuing R&D and innova￾tion in China. Unable to domestically develop technology, they use OFDI as an 520 P. Deng © 2013 The International Association for Chinese Management Research

Advancing Theories from Chinese OFDI 521 alternative to acquire strategic resources not easily developed in China (Deng, 2009).From this apect,Chinese OFDI may be from perceived misalignment between firms (Luo et al..2010).In addition,fragmentation of the Chinese economy at provincial and city levels has imposed substantial costs on domestic firms so that they prefer investing overseas if it is more expensive to do business across local boundaries than to go abroad (Boisot&Meyer,2008).Similarly,international expansion may signify that more Chinese MNCs are determined to escape domestic limita- tions and competitive disadvantages incurred by operating exclusively at home (Gao,Liu,Zou,2013;Liu,Wen,Huans 2008).Further more. several researchers found that large,well-connected Chinese firms benefit most from institutional advantages (see,e.g.,Voss et al.,2010),but smaller firms appear to rely more heavily on overseas networks because of institutional constraints (Lin. 2010:Zhou,2007) Although research has added considerable understanding of how Chinese inves- tors actively respond to different insttutional constraints,research is lacking on corporate political activities for Chinese firms,and understanding business- political linkages is limited:how do Chinese firms shape or reshape government policies toward OFDI,and how do they subsequently respond or react to them once the policies are formulated?Additionally,knowing the concurrent process of policymaking is important because it helps firms identify the political,institu- tional,or process areas they can influence.Currently,work has failed toexamine the reciprocal nature of interdependency that may jointly influence Chinese OFDI and ongoing corporate political activities.Therefore,scholars may use a co-evolutionar perspective(Lewin Volberda,1999)as an effective framework for analyzing Chinese cross-border acquisitions as it allows for entrepreneurial initiative in the negotiation of evolving policies that change both contexts and firms.As the specificities of Chinese environments may generate institutionally distinct MNCs that follow different evolutionary tra ries from developed MNCs,scholars may find it productive to conceptualize the co-evolution lens as multilateral and socially constructed(Child,Rodrigues,Tse,2012;Krug Hendrischke,2008),thereby enabling a better understanding of how this o-evolution affects the growth and expansion of Chinese MNCs In sum,as with other research streams,this paper augments one theory with other theoretical approaches to explain the dynamic nature of Chinese firms and institutions.Moreov er,the strategic tripod lens is a multilevel analysis considering three analysis levels;however,the critical micro-level variables-individual and groups-have been ignored.To look more closely at the interactions of institu- tional and strategic choices of Chinese firms at truly multiple levels,we must (Buckley et al.,2007). 2013 The International Association for Chinese Management Research

alternative to acquire strategic resources not easily developed in China (Deng, 2009). From this aspect, Chinese OFDI may be from perceived misalignment between firms’ needs and the home country institutional and market conditions (Luo et al., 2010). In addition, fragmentation of the Chinese economy at provincial and city levels has imposed substantial costs on domestic firms so that they prefer investing overseas if it is more expensive to do business across local boundaries than to go abroad (Boisot & Meyer, 2008). Similarly, international expansion may signify that more Chinese MNCs are determined to escape domestic limita￾tions and competitive disadvantages incurred by operating exclusively at home (Gao, Liu, & Zou, 2013; Liu, Wen, & Huang, 2008). Furthermore, several researchers found that large, well-connected Chinese firms benefit most from institutional advantages (see, e.g., Voss et al., 2010), but smaller firms appear to rely more heavily on overseas networks because of institutional constraints (Lin, 2010; Zhou, 2007). Although research has added considerable understanding of how Chinese inves￾tors actively respond to different institutional constraints, research is lacking on corporate political activities for Chinese firms, and understanding business– political linkages is limited: how do Chinese firms shape or reshape government policies toward OFDI, and how do they subsequently respond or react to them once the policies are formulated? Additionally, knowing the concurrent process of policymaking is important because it helps firms identify the political, institu￾tional, or process areas they can influence. Currently, work has failed to examine the reciprocal nature of interdependency that may jointly influence Chinese OFDI and ongoing corporate political activities. Therefore, scholars may use a co-evolutionary perspective (Lewin & Volberda, 1999) as an effective framework for analyzing Chinese cross-border acquisitions as it allows for entrepreneurial initiative in the negotiation of evolving policies that change both contexts and firms. As the specificities of Chinese environments may generate institutionally distinct MNCs that follow different evolutionary trajectories from developed MNCs, scholars may find it productive to conceptualize the co-evolution lens as multilateral and socially constructed (Child, Rodrigues, & Tse, 2012; Krug & Hendrischke, 2008), thereby enabling a better understanding of how this co-evolution affects the growth and expansion of Chinese MNCs. In sum, as with other research streams, this paper augments one theory with other theoretical approaches to explain the dynamic nature of Chinese firms and institutions. Moreover, the strategic tripod lens is a multilevel analysis considering three analysis levels; however, the critical micro-level variables – individuals and groups – have been ignored. To look more closely at the interactions of institu￾tional and strategic choices of Chinese firms at truly multiple levels, we must incorporate micro-level managerial intentionality and organization decision￾making processes, logically extending general FDI theory to a specific context (Buckley et al., 2007). Advancing Theories from Chinese OFDI 521 © 2013 The International Association for Chinese Management Research

522 P.Deng Chinese OFDI and the Liability of Foreignness A key insight of international business(IB)research is that MNCs face a substantial liability of foreignness(Zaheer,1995).As Chinese OFDI requires strategic and struc- tural adaptation to an expanding geographical horizon and rapid-paced techno logical and corporate governance change,Chinese MNCs managing their foreign operations face a heavy liability of foreignness (Globerman Shapiro,2009) because they come from a distinctive institutional and social environment.Perhaps a most salient feature is that Chinese firms are shaped by an institutional environ ment characterized by centralized state-controlled,authoritarian culture,and relation-based management (Tsui et al.,2004).They also have learned to cope with a complex institutional setting in which market and state interpenetrate and the cor world and government are interlinked(Sauvant et al,2010).Yet these distinct Chinese management styles and political conncctions could handicap managers of overseas afliliates. Further,Sinophobia could undermine Chinese overseas efforts.Those senti- ments have in business practice( mist,2008)in reaction to the dominant state nature of Chinese OFDI and China's relatively under developed corporate social responsibilities (Peng,2012).Therefore,researchers should explore whether Chinese firms are handicapped when entering a foreigr country where government and social connection supports are not available or may become disadvantages.'To overcome the liability of foreignness,both trans action cost economies (TCE)and Dunning's OLI paradigm stress that MNCs should equip their overseas subsidiaries with certain firm-specific advantages FSAs)sufficient to compensate for the nontrivial costs.Researchers realize tha Chinese MNCs possess some unique advantages that allow them to operate certain types of overseas activities effectively (see,e.g.,Sun,Peng,Ren,Yan,2012),but most scholars highlight that Chinese firms,including national champions,lag behind in their development of FSAs,especially in innovation and manageria capabilities,so that it is hard to compete in higher value-adding markets(see,e.g. Nolan Zhang,2002,2003).This research stream presents new questions regard- ng how Chine derived liabilities of foreignness. Researchers have studied how Chinese MNCs,particularly small to medium enterprises (SMEs),use network-based social capital for overcoming the liability of foreign ness (see,e.g.,Xie&Amine,2010).Guanxi-related social and busi networks play an important role in early internationalizing SMEs by providing unique opportunities and value in terms of information and knowledge(Zhou,Wu, Luo,2007).Other empirical findings highlight the importance of home country network ties in allowing Chinese firms to pursue new ventures internationally by mitigating information asymmetry (Yiu,Lau,Bruton,2007).Such relational assets provide distinct advantages for operating in uncertain environments. By analyzing Chinese M&As of German firms,ownership was shown to give the 2013 The International Asociation for Chinese Management Research

Chinese OFDI and the Liability of Foreignness A key insight of international business (IB) research is that MNCs face a substantial liability of foreignness (Zaheer, 1995). As Chinese OFDI requires strategic and struc￾tural adaptation to an expanding geographical horizon and rapid-paced techno￾logical and corporate governance change, Chinese MNCs managing their foreign operations face a heavy liability of foreignness (Globerman & Shapiro, 2009) because they come from a distinctive institutional and social environment. Perhaps a most salient feature is that Chinese firms are shaped by an institutional environ￾ment characterized by centralized state-controlled, authoritarian culture, and relation-based management (Tsui et al., 2004). They also have learned to cope with a complex institutional setting in which market and state interpenetrate and the corporate world and government are interlinked (Sauvant et al., 2010). Yet these distinct Chinese management styles and political connections could handicap managers of overseas affiliates. Further, Sinophobia could undermine Chinese overseas efforts. Those senti￾ments have become common in business practice (Economist, 2008) in reaction to the dominant state nature of Chinese OFDI and China’s relatively under￾developed corporate social responsibilities (Peng, 2012). Therefore, researchers should explore whether Chinese firms are handicapped when entering a foreign country where government and social connection supports are not available or may become disadvantages. To overcome the liability of foreignness, both trans￾action cost economies (TCE) and Dunning’s OLI paradigm stress that MNCs should equip their overseas subsidiaries with certain firm-specific advantages (FSAs) sufficient to compensate for the nontrivial costs. Researchers realize that Chinese MNCs possess some unique advantages that allow them to operate certain types of overseas activities effectively (see, e.g., Sun, Peng, Ren, & Yan, 2012), but most scholars highlight that Chinese firms, including national champions, lag behind in their development of FSAs, especially in innovation and managerial capabilities, so that it is hard to compete in higher value-adding markets (see, e.g., Nolan & Zhang, 2002, 2003). This research stream presents new questions regard￾ing how Chinese firms endeavour to overcome their institutionally and socially derived liabilities of foreignness. Researchers have studied how Chinese MNCs, particularly small to medium enterprises (SMEs), use network-based social capital for overcoming the liability of foreignness (see, e.g., Xie & Amine, 2010). Guanxi-related social and business networks play an important role in early internationalizing SMEs by providing unique opportunities and value in terms of information and knowledge (Zhou, Wu, & Luo, 2007). Other empirical findings highlight the importance of home country network ties in allowing Chinese firms to pursue new ventures internationally by mitigating information asymmetry (Yiu, Lau, & Bruton, 2007). Such relational assets provide distinct advantages for operating in uncertain environments. By analyzing Chinese M&As of German firms, ownership was shown to give the 522 P. Deng © 2013 The International Association for Chinese Management Research