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Journal of International Business Studies

, Volume 43, Issue 7, pp 655–676 | Cite as

Exploring the role of government involvement in outward FDI from emerging economies

  • Chengqi WangEmail author
  • Junjie Hong
  • Mario Kafouros
  • Mike Wright
Article

Abstract

We explain the mechanisms through which government impacts the internationalization of emerging-market enterprises (EMEs). Rather than merely viewing internationalization as the result of differences in resource positions, we demonstrate that an important source of variation is the idiosyncratic manner in which EMEs are affiliated with government agencies. Although government involvement has a strong effect on international expansion, this effect is contingent upon the level at which the firm is affiliated with government and the degree of state ownership. Different types and levels of governments have different objectives, exert different institutional pressures on EMEs, and impact their willingness and ability to internationalize differently. Government involvement influences the level of overseas investment, its location (developed vs developing countries) and its type (resource- vs market-seeking). These effects depend on firms’ own resources and capabilities, suggesting that not all firms possess equal ability to internalize government-related advantages and respond to institutional pressures. By demonstrating that resource-based and institutional constructs are highly dependent on one another, we enhance understanding of how EMEs succeed in expanding overseas, and why governments matter.

Keywords

internationalization emerging market enterprises resource-based view institutional theory government involvement 

Notes

Acknowledgements

Chengqi Wang acknowledges financial support from the British Academy (SG-090409), Natural Science Foundation of China (71273035) and Nottingham University Business School. Junjie Hong acknowledges financial support from the Program for New Century Excellent Talents in University, Humanity and Social Science Project (NCET-10-0335). We thank the Area Editor, Ishtiaq Mahmood, and three anonymous reviewers for their guidance during the review process. We also thank the research assistance provided by Ziliang Deng.

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Copyright information

© Academy of International Business 2012

Authors and Affiliations

  • Chengqi Wang
    • 1
    Email author
  • Junjie Hong
    • 2
  • Mario Kafouros
    • 3
  • Mike Wright
    • 4
  1. 1.Nottingham University Business School, University of NottinghamNottinghamUK
  2. 2.School of International Trade & Economics, University of International Business and EconomicsBeijingChina
  3. 3.Centre for International Business, University of Leeds (CIBUL), Leeds University Business SchoolLeedsUK
  4. 4.Imperial College Business SchoolLondonUK

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