Determinants of Greenfield emerging market outward FDI into the UK

Determinants of Greenfield emerging market outward FDI into the UK PurposeThe purpose of this paper is to examine the determinants of Greenfield emerging market (EM) outward foreign direct investment (OFDI) into the UK, a developed market (DM) host. Despite the increasing significance of EM OFDI, this particular theme of EM OFDI to a DM host has received relatively little attention from researchers. This paper seeks to address this shortfall.Design/methodology/approachConsidering the distinctiveness of EM OFDI in its firm-specific characteristics, given circumstances and motivations, this paper applies adapted “Resource-based view (RBV)” framework and institutional theory to build a theoretical framework. A range of hypotheses regarding “strategic-asset seeking”, “market seeking” and “institution seeking” motivations of EM OFDI, which reflect both “pull factors” (advantages in hosts) and “push factors” (disadvantages at home), were then developed. Using panel data for the years 2003–2012, the research questions were analysed using a sample of the then most important EM source countries which had undertaken Greenfield FDI into the UK.FindingsThe analysis results supported the hypotheses that strategic-asset seeking and institution seeking motivations were important in determining EM OFDI to the UK, with the coefficients of relevant variables showing statistical significance and expected sign (i.e. positive). However, the hypothesis on market seeking motivation of EM OFDI cannot be supported as the coefficient of the relevant variable, whilst showing the expected sign, had a statistically insignificant coefficient. Amongst the three control variables, the source countries’ exports and imports as a percentage of GDP was statistically significant and had the correct sign whilst, the UK’s share of intra-EU trade, whilst statistically significant, had the opposite sign to that expected. The third control variable, the exchange rate was not statistically significant, though it had the correct sign.Originality/valueThis paper provides an adjusted theoretical framework for the analysis of EM OFDI to DM with a novel application of institutional theory and RBV. It also qualifies and extends existing works on EM OFDI by including a wider range of EM source countries and DM hosts with empirical analysis results as well as theoretical suggestions. In addition, the paper offers up a range of policy implications for DM hosts. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Emerging Markets Emerald Publishing

Determinants of Greenfield emerging market outward FDI into the UK

Loading next page...
 
/lp/emerald-publishing/determinants-of-greenfield-emerging-market-outward-fdi-into-the-uk-IGxDxCYG8I
Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1746-8809
DOI
10.1108/IJoEM-02-2016-0055
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to examine the determinants of Greenfield emerging market (EM) outward foreign direct investment (OFDI) into the UK, a developed market (DM) host. Despite the increasing significance of EM OFDI, this particular theme of EM OFDI to a DM host has received relatively little attention from researchers. This paper seeks to address this shortfall.Design/methodology/approachConsidering the distinctiveness of EM OFDI in its firm-specific characteristics, given circumstances and motivations, this paper applies adapted “Resource-based view (RBV)” framework and institutional theory to build a theoretical framework. A range of hypotheses regarding “strategic-asset seeking”, “market seeking” and “institution seeking” motivations of EM OFDI, which reflect both “pull factors” (advantages in hosts) and “push factors” (disadvantages at home), were then developed. Using panel data for the years 2003–2012, the research questions were analysed using a sample of the then most important EM source countries which had undertaken Greenfield FDI into the UK.FindingsThe analysis results supported the hypotheses that strategic-asset seeking and institution seeking motivations were important in determining EM OFDI to the UK, with the coefficients of relevant variables showing statistical significance and expected sign (i.e. positive). However, the hypothesis on market seeking motivation of EM OFDI cannot be supported as the coefficient of the relevant variable, whilst showing the expected sign, had a statistically insignificant coefficient. Amongst the three control variables, the source countries’ exports and imports as a percentage of GDP was statistically significant and had the correct sign whilst, the UK’s share of intra-EU trade, whilst statistically significant, had the opposite sign to that expected. The third control variable, the exchange rate was not statistically significant, though it had the correct sign.Originality/valueThis paper provides an adjusted theoretical framework for the analysis of EM OFDI to DM with a novel application of institutional theory and RBV. It also qualifies and extends existing works on EM OFDI by including a wider range of EM source countries and DM hosts with empirical analysis results as well as theoretical suggestions. In addition, the paper offers up a range of policy implications for DM hosts.

Journal

International Journal of Emerging MarketsEmerald Publishing

Published: Jul 16, 2018

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off