Study On Foreign Direct Investment Model Choice Of Chinese International Firms

Following with the development of international intergradation, more and moreproduct factors flow between countries. As a major intermediacy, foreign direct investment(FDI) plays more and more important role in international economics. However, firmsneed to choose an appropriate model when they expand to the international market by theway of FDI. Related researches are becoming one of the most important issues in theliterature of international operation and strategic management. But the literatures oninternational expansion model choice pay little attention to the firms from developingcountries. To explore the FDI model choice characters of the firms from developingcountries, this paper treated the Chinese international firms as the samples.Firstly, we give the FDI model a new definition. During the past, different authordefined it differently and this might lead to trouble in understanding. Through enlargingthe scope, the new definition could include the FDI model choice of constructing andcontrolling.Secondly, based on different market condition, we have declared the main idea andthe shortcomings of different theories. Then we decide to treat the transactional cost theoryas the basic theory to analyze the content.Thirdly, this research has stated the nature of each FDI model and then compared theadvantages and disadvantages of international acquisition/ green field investment and jointventure/ whole equity. We think these internal characters would increase the difficulties indoing the international strategy decision.Then this paper has analyzed the relations between the cost factors and the preferenceof FDI model choice in system. These factors could be divided into three parts: the firmlevel; the industrial level, and the country level. We think different layer factors havedifferent effect for the multinational companies.Lastly, as the most important content and major target, this paper discussed thecharacters of FDI model choice on Chinese international expansion firms based on 275samples with binary logistic regression. Before the empirical research, we present the basic hypothesize according to the condition of Chinese multinational firms and state themeasurement of related independent variables. In the end, two empirical researches on theFDI model choice of constructing and controlling are presented and we get several usefulconclusions in theories and practical.