The Moderating Role of Institutional Quality in Developed Countries on
the Strategic Asset Seeking (SAS) Inward FDI from China: A
De-globalization Perspective
Abstract
Purpose –This study investigates how institutional quality in
developed markets moderate the relationship between the strategic assets
(SAs) and the inward foreign direct investment (IFDI) coming from
emerging markets (EM) firms.
Design/methodology/approach – The authors build upon resource
based theory and institutional theory to investigate the impacts of
Institutional frameworks on the strategic asset seeking (SAS) IFDI from
China in 31 developed countries (OECD) for a period from 2013-2018. A
stepwise general linear regression is used to test the hypothesis. The
study uses process macros to validate the moderation results obtained
from regression modelling. We also conduct multiple robustness tests to
ensure that the data is free from idiosyncrasies related to time series
data.
Findings – The results demonstrate that the institutional
quality in developed countries is not associated with inward FDI from
China; however, it negatively moderates the relationship between SAs and
IFDI. The results also indicate that IFDI from China is strongly
associated with SAs and insignificantly associated with natural resource
endowments in host countries.
Practical Implications – The study has managerial implications
for EM firm’s SAS drive during the current wave of anti-globalization.
Originality/value – The role of institutional quality on IFDI
disaggregated by the sectors of the economy is least understood in
literature. Our study attempts to bridge this gap by bringing a cross
sectional view of Institutional quality at various levels— while
interacting with SAS IFDI, at a time, when the World is heading towards
de-globalization.