Institutional Environment Of Home Country And International Target Market Selection Of INVs

International target market selection is a choice that the international new ventures(INVs) should make at the beginning of internationalization, and it will have critical impact on their long term performance. Although the researchers have published a large amount of papers concerning international target market selection, the samples of previous studies were mainly collected from developed countries. Therefore, these theories cannot be applied directly on the internationalization of new ventures come from China. Apart from that, the existing researches attach great importance to the influence of host country institution or the institutional distance between host country and home country on market selection, while the impact of home country institution is largely neglected.However, advantage originated from home country is the key factor to gain competitive advantage in overseas market, which is especially important for new ventures. Even though the uncertainty and diversity of institutional environment in China may do harm to the operation efficiency of INVs, they contribute to the acquisition of competitive advantage in similar institutional environment. Moreover, based on the experience of conducting business under the dynamic and complex institutional environment of home country, the entreprises and entrepreneurs may develop specific strategic thinking mode and behavior pattern, as well as acquire institutional knowledge. Especially for those with high learning capability, it’s more effective to observe and acquire institutional knowledge from home country institutional environment. Significantly, as a kind of scarce non-market resource in international market, institutional knowledge helps the enterprises to break though institutional barriers and develop competitive advantage. Despite that, few researchers have focused on the impact of home country institutional environment on international target market selection.In light of the shortcoming in the existing literature, on the basis of previous researches and taking 183 Chinese INVs from 8 different provinces as sample data, this paper empirically tests the relationship and mechanism between home country institutional environment, institutional knowledge and international target market selection, as well as the moderating effect of learning capability on the relationship between institutional environment and institutional knowledge. By analyzing the qusetionnaires collected, the result shows that: the institutional environment of home country may have direct or indirect impact on international target market selection, while learning capability moderates the relationship between institutional environment of home country and institutional knowledge.