The Moderating Role of Institutional Quality in Developed Countries on the Strategic Asset Seeking (SAS) Inward FDI from China: A De-globalization Perspective
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.