The impact of outward FDI on the performance of Chinese firms |
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| Affiliation: | 1. University of Trieste, Italy;2. University of Pavia, Italy;3. University of Antwerp, Belgium;1. National Institute of Science and Technology Policy, Japan;2. Graduate School of Economics, The University of Nottingham, United Kingdom;3. Preparatory Office for the Faculty of International Social Studies, Gakushuin University, Japan;4. Tokyo Kyodo Accounting Office, Japan;5. Faculty of Political Science and Economics, Waseda University, Japan;1. Dolinks School of Economics and Management, University of Science and Technology Beijing, Beijing, China;2. Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing, China;3. School of Economics and Management, University of Chinese Academy of Science, Beijing, China;4. Post-Doctoral Research Center, Industrial and Commercial Bank of China Limited, Beijing, China;1. Department of Economics and Institute of International Economics, National Chung Cheng University, Chiayi 62102, Taiwan;2. Department of Economics, National Tsing Hua University, Hsinchu 30043, Taiwan;3. Institute of Asian Studies, Tamkang University, New Taipei City 25137, Taiwan;1. Department of Strategic Management and Marketing, De Montfort University, Hugh Aston Building, The Gateway, Leicester, LE1 9BH, U.K;2. Centre for International Capital Markets, London Metropolitan University, 84 Moorgate, London EC2M 6SQ, UK |
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| Abstract: | Using new firm-level data from the Emerging Multinationals' Events and Networks DATAbase (EMENDATA), this paper investigates the effects on Chinese firms of Outward FDI (OFDI) into advanced European countries. Propensity score matching is combined with a difference-in-difference (DiD) estimator to reduce the problem of self-selection of treated firms in foreign markets, and to eliminate time-invariant and unobservable differences between those firms and the controls. The results provide robust evidence supporting the view that China's OFDI so far have had a positive impact on domestic activities in enhancing firms' productivity and scales of operation, measured by sales and employment. When we distinguish among investments on the basis of entry mode, accounting for endogeneity in the selection process, acquisitions facilitate early access to intangible assets, but are detrimental to financial performance, while greenfield investments have a stronger impact on the scale and productivity of Chinese multinationals investing in Europe. |
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