Details
| Original language | English |
|---|---|
| Pages (from-to) | 594-606 |
| Number of pages | 13 |
| Journal | Chinese geographical science |
| Volume | 23 |
| Issue number | 5 |
| Publication status | Published - 9 Mar 2013 |
| Externally published | Yes |
Abstract
The majority of multinational enterprises (MNEs) traditionally originate from developed countries. In the last ten years, however, there has been dramatic growth in foreign direct investment (FDI) from China. It is a comparatively new phenomenon that challenges the classic FDI theories. In this paper, we review the pros and cons of two important theories, known as the Ownership-Location-Internalization (OLI) model and Linkage-Leverage-Learning (LLL) model, and use the statistical data and company case studies from China to test the plausibility of these two models. We believe that neither of them suits totally: the OLI model is quite useful for understanding FDI from China to developing economies, while the LLL model is more powerful for explaining the FDI to developed economies. We argue that the companies from China attain a very advantageous position as intermediates in the global economy. They may catch up with the first movers if they integrate OLI-led and LLL-led FDI within one firm. This combination can bring together the most advanced knowledge acquired in developed economies with the knowledge about adaptation needs and the needs for cost reduction in production as expressed in developing economies. It may also accelerate the knowledge transfer globally. We thus fill a gap in research into the geographical pattern of Chinese FDI and offer a deeper understanding of the internationalization of Chinese MNEs and revolving knowledge transfer.
Keywords
- China, Linkage-Leverage-Learning model, outward foreign direct investment (FDI), Ownership-Location-Internalization model
ASJC Scopus subject areas
- Social Sciences(all)
- Geography, Planning and Development
- Earth and Planetary Sciences(all)
- General Earth and Planetary Sciences
Sustainable Development Goals
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In: Chinese geographical science, Vol. 23, No. 5, 09.03.2013, p. 594-606.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Foreign direct investment with Chinese characteristics
T2 - A middle path between Ownership-Location-Internalization model and Linkage-Leverage-Learning model
AU - Si, Yuefang
AU - Liefner, Ingo
AU - Wang, Tao
N1 - Funding Information: Received date: 2012-07-23; accepted date: 2012-10-24 Foundation item: Under the auspices of National Natural Science Foundation of China (No. 40971069, 41101120), State Scholarship Fund by China Scholaship Council, Ministry of Education of the people′s Republic of China (No. 2009614028) Corresponding author: WANG Tao. E-mail: wangtaonjnu@yahoo.com.cn © Science Press, Northeast Institute of Geography and Agroecology, CAS and Springer-Verlag Berlin Heidelberg 2013
PY - 2013/3/9
Y1 - 2013/3/9
N2 - The majority of multinational enterprises (MNEs) traditionally originate from developed countries. In the last ten years, however, there has been dramatic growth in foreign direct investment (FDI) from China. It is a comparatively new phenomenon that challenges the classic FDI theories. In this paper, we review the pros and cons of two important theories, known as the Ownership-Location-Internalization (OLI) model and Linkage-Leverage-Learning (LLL) model, and use the statistical data and company case studies from China to test the plausibility of these two models. We believe that neither of them suits totally: the OLI model is quite useful for understanding FDI from China to developing economies, while the LLL model is more powerful for explaining the FDI to developed economies. We argue that the companies from China attain a very advantageous position as intermediates in the global economy. They may catch up with the first movers if they integrate OLI-led and LLL-led FDI within one firm. This combination can bring together the most advanced knowledge acquired in developed economies with the knowledge about adaptation needs and the needs for cost reduction in production as expressed in developing economies. It may also accelerate the knowledge transfer globally. We thus fill a gap in research into the geographical pattern of Chinese FDI and offer a deeper understanding of the internationalization of Chinese MNEs and revolving knowledge transfer.
AB - The majority of multinational enterprises (MNEs) traditionally originate from developed countries. In the last ten years, however, there has been dramatic growth in foreign direct investment (FDI) from China. It is a comparatively new phenomenon that challenges the classic FDI theories. In this paper, we review the pros and cons of two important theories, known as the Ownership-Location-Internalization (OLI) model and Linkage-Leverage-Learning (LLL) model, and use the statistical data and company case studies from China to test the plausibility of these two models. We believe that neither of them suits totally: the OLI model is quite useful for understanding FDI from China to developing economies, while the LLL model is more powerful for explaining the FDI to developed economies. We argue that the companies from China attain a very advantageous position as intermediates in the global economy. They may catch up with the first movers if they integrate OLI-led and LLL-led FDI within one firm. This combination can bring together the most advanced knowledge acquired in developed economies with the knowledge about adaptation needs and the needs for cost reduction in production as expressed in developing economies. It may also accelerate the knowledge transfer globally. We thus fill a gap in research into the geographical pattern of Chinese FDI and offer a deeper understanding of the internationalization of Chinese MNEs and revolving knowledge transfer.
KW - China
KW - Linkage-Leverage-Learning model
KW - outward foreign direct investment (FDI)
KW - Ownership-Location-Internalization model
UR - http://www.scopus.com/inward/record.url?scp=84885189504&partnerID=8YFLogxK
U2 - 10.1007/s11769-013-0603-z
DO - 10.1007/s11769-013-0603-z
M3 - Article
AN - SCOPUS:84885189504
VL - 23
SP - 594
EP - 606
JO - Chinese geographical science
JF - Chinese geographical science
SN - 1002-0063
IS - 5
ER -