The Influence Of Host Countries' Institutional Environment On Performance Of China's OFDI

With the acceleration of economic globalization and the improvement of China's international status,the scale of OFDI in China has rapidly expanded,especially the implementation of the China's government “One Belt and One Road” strategy,which further boots and guides more and more China's enterprises to “go out” and actively participate in international competition.Although Chinese enterprises OFDI have made great progress,its performance is not ideal,and performance is a comprehensive indicator of whether companies can survive in international and domestic markets.New institutional economics believes that institutional factors will directly affect the exertion of corporate advantages and thus affect their return on investment.For foreign direct investment enterprises,once they invest overseas,the institutional environmental pressure from the host country will bring new challenges to the companies.In fact,the host country system has shaped the game rules faced by the company's operations from many aspects,and the performance of domestic OFDI companies will vary due to the host country's institutional environment.Based on the above reality,it is of great significance to consider the impact of host country institutional environment on OFDI performance.This paper first reviews OFDI related theoretical research,based on resource-based theory,transaction cost theory,etc.,sorts out the logic of the host country's institutional environment impact on OFDI performance from some aspects such as corruption supervision,government effectiveness,political stability,regulatory governance,legal system,and democratic freedom rights,and so on.Secondly,the corporate performance and the host country institutional environmental indicators measured by world governance index were built.Taking China's industrial enterprises which engage in outward foreign direct investment from 2000 to 2007 as samples,the impact of the host country's institutional environment on OFDI performance was tested empirically and the host country's institutional environment was found that has a significant positive effect on China's OFDI performance.When using the economic freedom index as a surrogate variable to measure the host country's institutional environment,the results are still robust,indicating that a good host country institutional environment has contributed to China's OFDI performance.Thirdly,establish the index of firms' institution dependence and analyze the moderating effect of firms' institution dependence on the relation between the institutional environment of host countries and performance of enterprises.The results show that China's overall OFDI enterprises are significantly dependent on the institutions,which has positive moderating effect on the relation between host countries' institutional environment and OFDI enterprises' performance.Finally,take into account thedifferences in the level of economic development of the host country and the differences in the objectives of foreign direct investment,use grouped regression to examine in depth whether the effect of the host country's institutional environment on China's OFDI performance is due to heterogeneity in the host country's economic development level,the host country's purpose of investment,etc.The heterogeneity test results confirm that the host country institutional environment has a national difference in China's OFDI performance,and the institutional environment of developed countries has a significant positive effect on China's OFDI performance.Although the institutional environment of developing countries has a positive influence,the role is not significant.In addition,resource-seeking,market-seeking,and technology-seeking OFDI performances are positively affected by the local institutional environment,but the positive effect of resource-seeking OFDI performance is even more significant.Therefore,under the background of accelerating globalization and the rapid development of China's foreign direct investment,choosing a host country with a good institutional environment for overseas investment is an important way to guarantee the good performance of China's foreign direct investment.