An Empirical Study On The Influence Of Host Country’s Political Risk On Multinational Enterprises’ Outward Foreign Direct Investment Performance

In the context of economic globalization,Chinese multinational enterprises(MNEs)must not only face and bear business risks from foreign exchange,finance and other aspects,but also inevitably face and bear political risks in the host country during their international operation.Changes in the operating environment of MNEs caused by political risk in the host country have a greater impact on MNEs.The acquisition of legitimacy,resources and transaction costs of MNEs in the host country are all affected by political risk,which may lead to serious economic losses of MNEs.Therefore,the study of the relationship between the political risk of host country and the Outward Foreign Direct Investment(OFDI)performance of MNEs,which is of great significance to the location selection of MNEs.Under the background of economic globalization,Chinese multinational enterprises(MNEs)must not only face and bear business risks from foreign exchange and finance,but also inevitably face and bear political risks from policies and institutional environment of the host country in their international operation.Changes in the production and operation environment of transnational enterprises caused by political risks in the host country have a greater impact on transnational enterprises.The legitimacy acquisition,resource acquisition and transaction costs of transnational enterprises in the host country are all affected by political risks,which may affect the performance of Outward Foreign Direct Investment(OFDI)of transnational enterprises.Therefore,it is of great significance to study the relationship between political risk in the host country and OFDI performance of multinational enterprises for location selection of multinational enterprises.This article from the perspective of legitimacy theory and transaction cost theory,analysis of the host country political risk and MNEs,the relationship between the performance of the foreign direct investment and the introduction of enterprise internationalization into the model and internationalization as regulating variable,and study the two for the host country political risk of the relationship between OFDI and MNEs performance adjustment effect.On the basis of theoretical analysis,this paper selected 1,281 OFDI events of Chinese a-share listed companies in Shanghai and Shenzhen from 2004 to 2015 as samples,and used statistical software STATA13.1 to empirically-test the proposed research hypothesis and theoretical model.Finally,according to the regression results,the conclusion is drawn.The research results of this paper show that:(1)the political risk of host country is negatively correlated with the OFDI performance of MNEs;(2)compared with sole proprietorship,joint venture plays a more significant role in weakening the negative correlation between host country’s political risk and the OFDI performance of MNEs;(3)the internationalization degree of MNEs has no moderating effect on the relationship between host country’s political risk and MNEs ’OFDI performance.This paper analyses the influence of the host country political risk the internal mechanism of multinational enterprise of OFDI performance,and studied the host country political risk relations between OFDI and MNEs performance to achieve the boundary conditions,through into the multinational enterprise internationalization into the model and internationalization as regulating variable makes the relationship between the theoretical model of more refined,more explanatory power.The results of this paper provide management enlightenment for MNEs to identify and manage political risks in host countries and improve the performance of OFDI.