This paper aims to review the effects of home regulatory institutions on outward foreign direct investment (OFDI) in the context of China and discuss the extent to which they can be extended to other emerging markets. The authors especially compare these empirical studies with theoretical discussions in each category, identify research gaps and suggest future research ideas. Practical implications are discussed.
It focuses specifically on three categories of regulatory institutions, including overall institutional development, liberalization of OFDI policies and state ownership (and its closely approximate forms). Using a systematic review, this paper has reviewed 26 empirical studies (23 quantitative and 3 qualitative studies) published in peer-reviewed journals.
These studies suggest that overall institutional development toward a market economy in general leads to increased OFDI, but this effect is contingent on the stage of such development and the capabilities of Chinese multinationals. Liberalized and supportive OFDI policies also facilitate OFDI activities but only into selective areas. Findings on state ownership have been mixed.
This review offers a full picture of empirical evidence on how multiple levels of regulatory institutions affect OFDI from China. In this way, the authors can identify the research gaps between theoretical discussions on home institutions and OFDI and empirical evidence. Thus, they make suggestions for future directions of studies.
