TY - JOUR
T1 - Outward FDI and efficiency in within-firm resource allocation – Evidence from firm-level data of China
AU - Chen, Lili
AU - Guo, Shaoyu
AU - Lu, Jian
AU - Gerschewski, Stephan
N1 - Funding Information:
This research was funded by the project of Humanities and Social Sciences Research in Western and Border Region of the Ministry of Education of China , “Research on the resource allocation effect and impact mechanism of China’s foreign direct investment” (Project Number: 18XJA790001).
Publisher Copyright:
© 2021 Elsevier Inc.
PY - 2021/6
Y1 - 2021/6
N2 - With the rapid expansion of outward foreign direct investment (OFDI) in China over the last two decades, OFDI has become an increasingly important way of internationalization for firms. This paper documents how firms’ OFDI and its different patterns may affect their internal resource allocation efficiency by adopting PSM-DID method and using firm-level data of China. Our results show that China's OFDI significantly improves the overall efficiency of resource allocation within enterprises, which has a time lag effect. Furthermore, we find that different patterns of firms’ OFDI display significant heterogeneity in their performances. All results remain robust when we replace key variables with different indexes, change the matching method, recalculate parameter, and change the sample size. The key implication of the paper is that both the value and the pattern of OFDI of Chinese enterprises do have significant influences on its internal resource allocation.
AB - With the rapid expansion of outward foreign direct investment (OFDI) in China over the last two decades, OFDI has become an increasingly important way of internationalization for firms. This paper documents how firms’ OFDI and its different patterns may affect their internal resource allocation efficiency by adopting PSM-DID method and using firm-level data of China. Our results show that China's OFDI significantly improves the overall efficiency of resource allocation within enterprises, which has a time lag effect. Furthermore, we find that different patterns of firms’ OFDI display significant heterogeneity in their performances. All results remain robust when we replace key variables with different indexes, change the matching method, recalculate parameter, and change the sample size. The key implication of the paper is that both the value and the pattern of OFDI of Chinese enterprises do have significant influences on its internal resource allocation.
KW - China
KW - Firm internationalization
KW - Foreign direct investment
KW - Outward FDI
KW - PSM-DID
KW - Resource allocation
UR - http://www.scopus.com/inward/record.url?scp=85105009521&partnerID=8YFLogxK
U2 - 10.1016/j.asieco.2021.101298
DO - 10.1016/j.asieco.2021.101298
M3 - Article
AN - SCOPUS:85105009521
SN - 1049-0078
VL - 74
JO - Journal of Asian Economics
JF - Journal of Asian Economics
M1 - 101298
ER -
