Home country institutional environments and foreign expansion of emerging market firms

Jie Wu*, Xiaoyun Chen

*Corresponding author for this work

Research output: Contribution to journalArticle

62 Citations (Scopus)

Abstract

We propose that home country institutional environment shapes emerging market firms' foreign expansion. We argue that better-developed home country institutional environment promotes emerging market firms' expansion to foreign markets more advanced than the home country, while institutional instability in the home country reduces this propensity. We further hypothesize that the effects of home country institutional environment are contingent on firm-specific government ownership. Data on the foreign expansion of 921 Chinese firms in the period of 1996-2000 provide strong support for the effects of home country's institutional development and institutional instability. We also find that a high degree of government ownership weakens the positive effect of home country's institutional development on emerging market firms' propensity to expansion to more advanced markets.

Original languageEnglish
Pages (from-to)862-872
Number of pages11
JournalInternational Business Review
Volume23
Issue number5
Early online date14 Feb 2014
DOIs
Publication statusPublished - Oct 2014

Keywords

  • China
  • Emerging markets
  • Foreign expansion
  • Home country environment
  • Institutional development
  • Institutional environment
  • Institutional instability

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