Research On The Impact Of Bilateral Investment Treaties On Overseas Business Performance Of Multinational Enterprises

Since the implementation of the "Go Global" policy in October 2000,the number and scale of overseas investments by Chinese enterprises has been growing.Compared to domestic enterprises,overseas enterprises not only lack international business management capabilities and coherent overseas investment strategies,but also face the risk of stagnation of investment projects due to policy uncertainties in the host country,resulting in project losses.In order to solve the many problems and risks in overseas business activities,it is necessary to seek an external coping mechanism Bilateral Investment Treaty(BIT)to reduce uncertainties and avoid predictable risks in the business process.This has a bearing on both the overall layout of the company’s resource allocation and the future direction of its overseas markets.Based on financial data of overseas subsidiaries directly invested in by Chinese A-share listed companies from 2012-2022.this paper adopts a double fixed effects model to systematically reveal the intrinsic logical association between BIT quality and the overseas business performance of MNE.At the empirical level,we explore in depth whether different perspectives such as regional heterogeneity and BIT content heterogeneity distort the mechanism of the effect of BIT quality on firms’ overseas business performance,further clarify the mechanism of the effect of BIT quality on firms’ overseas business performance,and enrich the study of firms’ overseas business performance from the perspective of institutional theory.The study finds that:(1)High-quality BIT have a significant contribution to the overseas business performance of multinational enterprises.(2)The "investment protection" and "investment facilitation" provisions have a significant impact on the overseas business performance of multinational enterprises.(3)There is regional heterogeneity in the impact of BIT on the overseas business performance of multinational enterprises.High-quality BIT significantly boost the performance of overseas firms in developing countries compared to developed countries.High quality BIT significantly contribute to the performance of overseas firms in countries that are not signatories to the Belt and Road Agreement compared to countries that are signatories to the Belt and Road Agreement.(4)High-quality BIT can bridge the large institutional distance between China and host countries,thus improving the overseas business performance of Chinese multinational enterprises in countries with large institutional differences in China.Against the backdrop of the stagnant development of China’s BIT,there is an urgent need to revise the substantive and procedural provisions of the BIT to provide guidance and protection to overseas enterprises in order to improve their overseas business performance.At the governmental level,the government should revise the BIT in a targeted manner and raise the level of substantive provisions in order to strengthen investment protection and promote investment facilitation.At the enterprise level,Chinese overseas enterprises should pay active attention to the host country investment regime,establish an assessment system for potential investment risks in the target country,and prepare sufficient free capital to meet the possible costs of host country risks in order to improve their overseas business performance.