Abstract
We study antecedents of the international ownership strategies of Chinese multinational enterprises (MNEs). Analyzing firm-level data on 380 outward acquisitions of Chinese MNEs during 2005–2012, we find their ownership shares to be negatively related to administrative and regulative distance, but positively related to cultural and geographical distance between home and host countries. Moreover, higher ownership shares are acquired in target countries with a high density of strategic assets and high financial-market capitalization, while state-owned enterprises take lower equity positions than private companies. Overall, we find home-country institutional factors more relevant for international ownership strategies among Chinese MNEs than cross-national distance factors.
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Notes
Alternatively, cultural distance may also be measured based on more cultural dimensions, for example, by adding the Hofstede dimensions of long-term versus short-term orientation and indulgence versus restraint, or by relying on the GLOBE study that identified nine dimensions of national cultures (House et al, 2004). However, as these dimensions have been measured for fewer countries and do not include all countries where Chinese companies recently made acquisitions, applying them would have resulted in a substantial reduction of our survey sample. Therefore, we have used here only the four initial Hofstede dimensions for measuring cultural distance.
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Acknowledgements
The authors would like to thank participants of the EAMSA 2012 and AIB 2013 conferences and two anonymous reviewers for helpful comments on earlier versions of this article. The review process for this article was entirely handled by Guest Editor Hendrik Meyer-Ohle. This research was supported by a KUBS faculty research grant.
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Lee, Y., Hemmert, M. & Kim, J. What drives the international ownership strategies of Chinese firms? The role of distance and home-country institutional factors in outward acquisitions. Asian Bus Manage 13, 197–225 (2014). https://doi.org/10.1057/abm.2014.5
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DOI: https://doi.org/10.1057/abm.2014.5