Technological innovation policy and Chinese heterogeneity enterprises' outward foreign direct investment

• Published in: International journal of emerging markets Vol. 18; no. 10; pp. 3763 - 3783
• Main Authors: Zhao, Jinjing, Lee, Jongchul
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Publishing Limited 21.11.2023; Emerald Group Publishing Limited
• Subjects: Developing countries; Economic conditions; Emerging markets; Foreign investment; Host country; Industrial policy; Innovations; LDCs; Local economy; Manufacturing; Motivation; Natural resources; Ownership; Politics; Production capacity; Profits; Public enterprise; Technological change; United States > US; China; Germany; Failed OFDI; Made in China 2025; Enterprise heterogeneity; Outward foreign direct investment (OFDI)
• ISSN: 1746-8809; 1746-8817
• DOI: 10.1108/IJOEM-04-2021-0535

PurposeThe study aims to analyze the role of the Made in China 2025 (MIC2025) initiative in China's Outward Foreign Direct Investment (OFDI) and the factors affecting the success or failure of Chinese enterprises' OFDI from the perspectives of the heterogeneity of home country enterprises.Design/methodology/approachBased on data on China's OFDI obtained from the China Global Investment Tracker (CGIT), the study uses the difference-in-differences model to analyze 2,670 completed OFDI deals and 211 failed OFDI deals by Chinese enterprises, from 2009 to 2018.FindingsThe study found that the effect of MIC2025 on Chinese enterprises' OFDI varies according to the ownership structure of the home country's enterprises. For successful OFDI, MIC2025 significantly impacted central state-owned enterprises (CSOEs), while it did not significantly influence local SOEs and privately owned enterprises. For failed OFDI, the MIC2025 plan only increased the failure of CSOEs' OFDI for the technology-seeking motivation in high-income host countries. Further, the investment options of local SOEs differ from those of CSOEs. Considering their aim to drive the local economy and seek profits, they are more similar to those of privately owned enterprises.Originality/valueThis study used a new database (i.e. the CGIT) to analyze Chinese enterprises' OFDI. It discussed the role of MIC2025 for different enterprises from the perspectives of successful and failed OFDI. It thus provided a new basis for analyzing policy affecting the OFDI of Chinese enterprises.