State-owned MNCs and host country expropriation risk: The role of home state soft power and economic gunboat diplomacy
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Expropriation risk has a binding effect on foreign direct investment (FDI). However, state-owned multinational corporations may counter the monopoly power of the host state by leveraging the political influence of their home government. The magnitude of this counter force, we argue, may vary, depending on the strength of political relations between the home and host state, and the level of economic dependence of the host country on the home market. We find supporting evidence of our hypotheses using Chinese firm-level FDI information between 2003 and 2010.
Keywordsforeign direct investment (FDI) expropriation risk state-owned enterprises political relationships economic diplomacy
I thank the guest editors and the anonymous reviewers for their comments that help me improve the paper. This paper has also benefited from comments and suggestions provided by Professor Paul M. Vaaler from Carlson School of Management, University of Minnesota, Professor Quan Li from the Department of Political Science, Texas A&M University, and Professor David B. Allen from Surrey Business School. Data collection assistance provided by Eric An from GTA and the financial support from Surrey Business School are both highly appreciated. All errors are my own.
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