Locational Determinants Of Chinese Multinationals In East And Southeast Asia:the Role Of Formal Institutions

The international expansion of multinational enterprises(MNEs)from emerging markets is a rapidly evolving phenomenon which is reshaping the global landscape.In the past two decades,both research and experience have contributed to significant progress in understanding how emerging-market MNEs choose FDI locations.One of the specific research questions arising is whether conventional theories are still valid for explaining the international behavior of emerging-market MNEs.The purpose of this research is to explore Chinese firm-specific behavioral determinants on FDI location choice by taking formal institutions into consideration.Drawing on the institutional theory,we propose that formal institutional development in host countries plays an important role in determining the location choice of Chinese MNEs.We further argue that formal institutional distance has a positive effect on Chinese MNEs location decisions.Using a firm-level data of Chinese affiliates established in eight East and Southeast Asian countries observed over the 2002-2013 period,we present the empirical results to substantiate the derived hypotheses.Our findings suggest that formal institutional development is a substantial factor in determining the location choice of Chinese MNEs.We also found that formal institutional distance with positive direction significantly promotes Chinese MNEs' entrance.