The Influence Of Cross-Cultural Factors On Chinese Enterprises’OFDI

Along with the implementation of "going out" strategies and "the Belt and Road" Initiatives,the Chinese’ enterprises face the opportunities and challenges of internationalization.It is important to pay attention to care about cross cultural risk for multi-national cooperations.Based on the current situation of Chinese enterprises’ outward direct investment(OFDI),this paper studies the impact of cross cultural factors on location selection and success of Chinese enterprises’ OFDI through sorting out the theoretical mechanism and constructing empirical models.Based on the cultural dimension theory of Hofstede,this paper explores the influence of cultural differences on Chinese OFDI from two aspects of macro and micro by using the classic KSI(Kogut and Singh 1988)cultural distance index calculation method.The study found:(1)from the national macro level,the influence of cultural distance(difference)on OFDI has a nonlinear "S" type.Specifically,when the cultural distance is short(the first interval),there is a significant negative relationship between the culture and investments,which means Chinese enterprises tend to invest to the host countries that their cultural distance are not far away from China;when culture distance is large(second confidence interval),the relationship between culture and OFDI shows a significant positive effects,Chinese OFDI tend to invest to the host countries which are large cultural distance from China;and when the cultural distance exceeds third after the interval,there is no invests from Chinese’ MNCs because of the large cultural distance;(2)from the microcosmic aspect of enterprise,based on the binary marginal model,whether intensive or extended margin,it is found that the coefficient of cultural distance index is significantly positive,which indicates that the increase of cultural difference between the host country and the home country increases the scale of Chinese enterprises’ direct investment and helps to expand the scope of the industry.This shows that the host country with very different cultural environment may have the unique advantage assets that the home country does not have in their cultural background,and attracts Chinese enterprises to enter the market in the way of investment.Based on the binary selection model,the results show that cultural differences can reduce the failure rate of overseas investment to a certain extent.Cultural differences cultivate the cultural sensitivity of transnational enterprises in the process of internationalization,enhance the cultural adaptability and thus enhance the ability of enterprises to deal with risks,so as to ensure the success of investment.Therefore,Chinese enterprises should make good use of the positive effects brought by cultural differences,avoid hidden risks and improve their own strengths to promote their long-term overseas development.