A Tale of the Two Economic Systems: Institutional Perspective of Chinese Outward FDI

Abstract

State-owned multinational enterprises (SOMNEs) constitute a substantial portion of Chinese outward foreign direct investment (FDI). From an institutional affiliation perspective, this paper examines the differences in the two economic systems (state-owned vs. privately owned) for engaging in outward FDI. Leveraging a sample of Chinese outward FDI projects between 2004 and 2018, we conduct analysis on FDI frequency, location choices, and FDI motives. We also consider the moderating effects of the temporal and space dimensions. The results inform us that the two economic systems are complementary in promoting outward FDI from the home country.