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Cultural distance, political risk and location decisions of emerging-market multinationals: a comparison between Chinese and Indian firms

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  • Diego Quer
  • Enrique Claver
  • Laura Rienda

Abstract

The international expansion of emerging-market multinational enterprises (MNEs) is becoming a research topic of increasing interest among international business scholars. One of the specific research questions arising is whether conventional theoretical arguments originated in studies on developed-country MNEs are still valid for explaining the international behavior of emerging-market MNEs. Drawing on the institutional theory, this paper argues that the influence of host country institutional factors on location decisions differs between Chinese and Indian MNEs. We hypothesize that the negative impact of both cultural distance and political risk on location decisions is lower for Chinese MNEs as compared to Indian MNEs. From a sample of 832 outward foreign direct investments (OFDIs) we obtain empirical support for these hypotheses.

Suggested Citation

  • Diego Quer & Enrique Claver & Laura Rienda, 2017. "Cultural distance, political risk and location decisions of emerging-market multinationals: a comparison between Chinese and Indian firms," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(4), pages 587-603, October.
    • Handle: RePEc:taf:rjapxx:v:22:y:2017:i:4:p:587-603
    DOI: 10.1080/13547860.2017.1312065
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    Cited by:

    1. Chung Van Dong & Hoan Quang Truong, 2020. "The determinants of creative goods exports: evidence from Vietnam," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(2), pages 281-308, June.
    2. Nhan Thanh Thi Hoang & Hoan Quang Truong & Chung Van Dong, 2020. "Determinants of Trade Between Taiwan and ASEAN Countries: A PPML Estimator Approach," SAGE Open, , vol. 10(2), pages 21582440209, May.
    3. Munjal, Surender & Varma, Sumati & Bhatnagar, Ankur, 2022. "A comparative analysis of Indian and Chinese FDI into Africa: The role of governance and alliances," Journal of Business Research, Elsevier, vol. 149(C), pages 1018-1033.
    4. Bhatnagar, Ankur, 2021. "What drives Indian Non-SOE FDI into Africa?," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    5. Adegbite, Grace Oluwafolahanmi, 2024. "The Effect of Foreign Exchange Exposure on the Financial Performance of MNCs in Rwanda," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(6), pages 208-229, June.
    6. Victor NYATEFE & Mawussé Komlagan Nézan OKEY, 2021. "Les déterminants de la croissance des exportations de biens culturels au Togo," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 54, pages 83-99.
    7. Ebenezer Boateng & Peterson Owusu Junior & John G. Gatsi & Adam M. Anokye & Mac Junior Abeka & Emmanuel Asafo‐Adjei, 2024. "Institutions and venture capital market development in sub‐Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1381-1406, March.

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