Revisiting the OLI Paradigm: The Institutions, the State, and China's OFDI
34 Pages Posted: 23 Nov 2011
Date Written: November 23, 2011
We propose a modified theoretical framework based on John Dunning’s classical OLI paradigm in the international business literature to analyze Chinese firms’ fast-growing and aggressive outward foreign direct investment (OFDI). In particular, from an institutional perspective, we suggest a 'state-stewardship' view to incorporate state institutions into the OLI paradigm. This paper supplements our earlier work (Ren, Liang, and Zheng, 2011) on identifying the formal institutional determinants of Chinese firms’ OFDI motivations and strategies, by further looking at the impact of direct and indirect policies, and the OFDI state-controlled financial intermediaries. Under our modified OLI framework we also examine the potential concerns on China’s state-backed OFDI and its implication on long-term sustainability.
Keywords: outward foreign direct investment, institutions, state-stewardship view, OLI paradigm
JEL Classification: F230, H810, M480
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