Foreign Direct Investment Speed and Firm Performance: Evidence from China

Abstract

—We investigate how government support affects the impact of rapid Outward Foreign Direct Investment (OFDI) expansion on firm performance. In many emerging Asia countries, government is actively involved in firms’ internationalization. We argue that rapid OFDI expansion is more likely to increase firm performance with government support, which compensates for firms’ lack of superior internal resources and capabilities through state ownership or government affiliation. Our theories are supported by the empirical evidences from China, the largest emerging country in Asia. Our study helps us further understand the business modes of OFDI from emerging economies in Asia.