Knowledge Seeking and Outward FDI of Emerging Market Firms: The Moderating Effect of Inward FDI

Authors


Correspondence to: Jing Li, Simon Fraser University, Beedie School of Business, 8888 University Dr., Burnaby, British Columbia V5A 1S6 , Canada. Email: jingli@sfu.ca

Abstract

This study examines whether a host country's industry-specific technology advantage increases the propensity of emerging market multinational enterprises (EMNEs) to invest in the host country. The study further explores whether inward FDI in EMNEs' home markets, by generating knowledge spillovers in the relevant industries, decreases EMNEs' propensity to invest overseas for knowledge seeking. We test our arguments using a longitudinal data set of the overseas investment activities of Chinese manufacturing firms. We find support for our hypotheses after controlling for other important outward FDI motives. We discuss the implications of our results for research and practice.

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