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Geographic proximity and location choice of foreign direct investment in China

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Abstract

Our research examines the concept of geographic proximity, particularly proximity to knowledge, market and labor resources in China, to understand how the embedded spatial context of a region influences the preferences of enterprises investing in China. Using a sample of Taiwanese enterprises investing in China from 2007–2011, we find that proximity to knowledge and labor resources have a significant negative influence on the location choice of Taiwanese enterprises, whereas proximity to market has a significant positive influence. Furthermore, we find that the influence of proximity on location choice changes with different industry characteristics.

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Acknowledgements

The authors acknowledge constructive suggestions from two anonymous reviewers and are grateful for comments by Mei-Chu Huang, Chun-Yuan Christian University, and Chun-Ju Liu, Tunghai University, on earlier drafts. The authors also acknowledge financial support from the National Science Council of Taiwan, Republic of China (NSC 96-2416-H-194-032-MY3). The authors alone are responsible for all limitations and errors that may relate to the study and the article.

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  1. Department of Accounting, National Chung Hsing University, 250, Kuo Kuang Road, Taichung, 402, Republic of China, Taiwan

    Sui-Hua Yu

  2. Department of Accounting and Information Technology, National Chung Cheng University, 168 University Road, Min-Hsiung, Chia-Yi, 62102, Republic of China, Taiwan

    Chen Feng Shen

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  1. Sui-Hua Yu
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Yu, SH., Shen, C. Geographic proximity and location choice of foreign direct investment in China. Asian Bus Manage 12, 351–380 (2013). https://doi.org/10.1057/abm.2013.4

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