Enterprise Innovation Affect Foreign Direct Investment Decision

Under the “Innovation Driven Development” strategy and the “Belt and Road Initiative”,Chinese companies actively carry out research and development and innovation,and actively integrate into globalization and go abroad to invest in foreign direct investment.However,global foreign direct investment flows have decreased for two consecutive years,and China's foreign direct investment flows have also experienced negative growth for the first time.The government has increased the review of the authenticity and compliance of foreign direct investment.Enterprises should be more rational when making foreign direct investment choices.Innovation is an important advantage of enterprises in fierce competition.When enterprises make decisions on foreign direct investment,the impact of innovation is one of the issues that enterprises and governments should pay attention to.This paper combines the microdata of manufacturing listed companies in the Directory of Foreign Direct Investment Enterprises and CSMAR Guotai'an Database,and analyzes the impact of corporate foreign direct investment to the innovation by using the micro data of 1362 Chinese listed companies during the period of 2008-2015.The hybrid Logit model and the hybrid Probit model in the binary regression model were used to conduct empirical research.Through detailed empirical analysis,the significant positive impact of the enterprise's innovation on the foreign direct investment decision of the enterprise was tested.The scale and R&D of the enterprise were also pointed out.The input rate,debt ratio and net profit rate also have a significant positive impact on corporate foreign direct investment.The research conclusions of this paper show that the innovation of Chinese enterprises will affect their decision-making on foreign direct investment.In general,the stronger the innovation of enterprises,the more inclined they are to direct foreign investment,but there are differences between different intensive enterprises and enterprises in different industries.Specifically,the innovation of capital-intensive and technology-intensive enterprises have a significant positive impact on corporate foreign direct investment,but the innovation of labor-intensive enterprises has a significant negative impact on corporate foreign direct investment.Innovation have a significant positive impact on foreign direct investment in chemical raw materials and chemical manufacturing,computer,communications and other electronic equipment manufacturing,automotive manufacturing and specialty equipment manufacturing.But for electrical machinery and equipment manufacturing,the impact of innovation on general equipment manufacturing and pharmaceutical manufacturing is not significant.The research in this paper provides a micro level of empirical evidence for Chinese enterprises' decision on foreign direct investment.It also provides some policy implications for the Chinese government to combine the "building an innovative country" with the "going out" strategy.The government should formulate Appropriate policies to support and encourage enterprise innovation will not only help enterprises to enhance their innovation capabilities,but also increase the possibility of enterprises making foreign direct investment,and help enterprises better enhance their own strength and integrate into the international market.