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Is it possible to escape? Local protectionism and outward foreign direct investment by Chinese privately-owned enterprises

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Abstract

This study explores the impact of local protectionism on outward foreign direct investment (OFDI) and how firms respond to local protectionism in a transition economy. We find that local protectionism exerts a negative effect on the OFDI decisions of Chinese privately-owned enterprises (POEs). However, this negative impact is weakened by POEs’ corporate philanthropy strategy, whereas corporate political activity reinforces such an impact. This research extends the lens of institutional escapism by highlighting local protectionism as a barrier to OFDI and provides new insights into how firms respond to the subnational environment by adopting various nonmarket strategies.

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Acknowledgements

This work was supported by the National Natural Science Foundation of China under Grant numbers: 71572174, 71272165, 71832012, 71972166.

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  1. School of Management, Zhejiang University, 388 Yuhangtang Road, Hangzhou, Zhejiang Province, 310058, People’s Republic of China

    Huiying Luo, Aiqi Wu & Xiaotong Zhong

  2. Birmingham Business School, University of Birmingham, Edgbaston, Birmingham, B15 2TY, UK

    Xiaohui Liu

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Luo, H., Liu, X., Wu, A. et al. Is it possible to escape? Local protectionism and outward foreign direct investment by Chinese privately-owned enterprises. Asia Pac J Manag 38, 1499–1524 (2021). https://doi.org/10.1007/s10490-019-09697-7

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