Host government digitalization and Chinese OFDI entry mode choice: green-field investment vs cross-border M&A
Abstract
Based on a theoretical framework based on the perspectives of open governance, transparent governance, and smart governance, the article comprehensively explains the potential impact of host country government digitalization on Chinese enterprises’ OFDI entry mode selection. The results indicate that host government digitalization significantly promotes the probability of Chinese enterprises investing by greenfield investment mode; After using instrumental variable to eliminate endogenous interference and undergoing a series of robustness checks, this conclusion remains robust; Host government digitalization influences the OFDI mode choices of Chinese enterprises by suppressing corruption and strengthening intellectual property protection. Based on the research conclusions, we put forward policy suggestions on “how Chinese enterprises should make OFDI entry mode decision and optimize the project management after entry based on the level of host government digitalization“.
First published online 02 April 2025
Keyword : government digitalization, OFDI entry mode choice, green-field investment, cross-border M&A
How to Cite
Li, X., Li, G., & Li, X. (2025). Host government digitalization and Chinese OFDI entry mode choice: green-field investment vs cross-border M&A. Technological and Economic Development of Economy, 1-30. https://doi.org/10.3846/tede.2025.22519
This work is licensed under a Creative Commons Attribution 4.0 International License.
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Estrin, S., Baghdasaryan, D., & Meyer, K. E. (2009). The impact of institutional and human resource distance on international entry strategies. Journal of Management Studies, 46(7), 1171–1196. https://doi.org/10.1111/j.1467-6486.2009.00838.x
Gatignon, H., & Anderson, E. (1988). The multinational corporation’s degree of control over foreign subsidiaries: An empirical test of a transaction cost explanation. The Journal of Law, Economics, and Organization, 4(2), 305–336.
Goel, G., & Tripathi, R. (2007). E-government approach to management of intellectual property in Indian folklore. Foundations of E-government, (1), 302–312.
Habib, M., & Zurawicki, L. (2002). Corruption and foreign direct investment. Journal of International Business Studies, 33, 291–307. https://doi.org/10.1057/palgrave.jibs.8491017
Hennart, J.-F., & Park, Y.-R. (1993). Greenfield vs. acquisition: The strategy of Japanese investors in the United States. Management Science, 39(9), 1054–1070. https://doi.org/10.1287/mnsc.39.9.1054
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Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm – A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8, 23–32. https://doi.org/10.1057/palgrave.jibs.8490676
Kachwamba, M. (2011). Impact of e-government on transaction cost and FDI inflows: A proposed conceptual framework. International Journal of Business and Management, 6(11), 285–296. https://doi.org/10.5539/ijbm.v6n11p285
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Kim S.-B., & Kim, D. (2020). ICT implementation and its effect on public organizations: The case of digital customs and risk management in Korea. Sustainability, 12(8), Article 3421. https://doi.org/10.3390/su12083421
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