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Governance and the Choice of Entry Mode by FDI Firms Entering China

Author

Listed:
  • Yi-Chieh Chang

    (Department of Business Administration, St. John's University/ Taipei Campus, Taiwan.)

  • Ming-sung Kao

    (Department of International Trade and Finance, Fu Jen Catholic University, Taiwan.)

Abstract

In the past 20 years, China's economy made a dramatic change. This was likely due to its improved institutional environment. In this study, we use 6 governance indicators, compiled by World Bank, to measure the change in China's institutional environment and to provide some empirical evidence of the linkage between the quality of governance and a firm's choice on entry mode. We determined that improved political stability, regulatory quality and rule of law would induce foreign firms entering China to be more willing to utilize a high-commitment entry mode, and thus, would result in more stable capital investment from foreign organizations.

Suggested Citation

  • Yi-Chieh Chang & Ming-sung Kao, 2009. "Governance and the Choice of Entry Mode by FDI Firms Entering China," Economics Bulletin, AccessEcon, vol. 29(4), pages 2957-2966.
    • Handle: RePEc:ebl:ecbull:eb-09-00521
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    More about this item

    Keywords

    governance; entry mode;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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