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Outbound linkage and inbound leverage for emerging multinationals: A signaling theory perspective

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Abstract

Despite the rise of interest in emerging market multinationals (EMNEs), the question of whether outward foreign direct investment (FDI) influences their resource acquisition in home countries remains underexplored. Contrary to the prior literature, which contends that EMNEs build outbound linkage through outward FDI so as to leverage outbound resources, this paper, however, focuses on whether outbound linkage influences their inbound resource leverage from home countries as well. Drawing on signaling theory, we propose that outbound linkage to developed countries, developing countries, and tax havens via outward FDI may reflect EMNEs’ different quality and prospects, which in turn influence their inbound leverage of government, financial, and market resources, respectively. Using panel data of 581 Chinese listed firms during the period 2002–2012, we largely verified our hypotheses, thus extending the boundary of the consequences of outward FDI on EMNEs in the signaling theory perspective.

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Acknowledgements

We thank the guest-editorial team and two reviewers of the Special Issue on “A Decade of Dragon MNEs,” as well as the editor and the reviewer of this issue for their insightful and constructive comments. This research is partially supported by National Natural Science Founding of China (No. 71072071) and Monte Ahuja Endowment Fund for the Monte Ahuja Endowed Chair of Global Business at Cleveland State University.

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Authors and Affiliations

  1. School of Business, East China University of Science and Technology, Shanghai, 200237, China

    Haifeng Yan & Juan Wang

  2. Monte Ahuja College of Business, Cleveland State University, Cleveland, OH, 44115, USA

    Ping Deng

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  1. Haifeng Yan
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Correspondence to Juan Wang.

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Yan, H., Wang, J. & Deng, P. Outbound linkage and inbound leverage for emerging multinationals: A signaling theory perspective. Asia Pac J Manag 35, 347–372 (2018). https://doi.org/10.1007/s10490-017-9554-8

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