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Evolving FDI Legitimacy and Strategic Choice of Japanese Subsidiaries in China

Published online by Cambridge University Press:  02 February 2015

George Z. Peng  and
Paul W. Beamish
George Z. Peng
Affiliation:
The University of Western Ontario, Canada
Paul W. Beamish
Affiliation:
The University of Western Ontario, Canada
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Abstract

We examine how evolving FDI legitimacy in China influences two strategic choices (entry mode and expatriate staffing) of Japanese subsidiaries there over the period 1993–2000, based on data aggregated from Toyo Keizai and the National Bureau of Statistics of China (various years). As FDI legitimacy improves over time, we find that smaller subsidiaries tend to choose the wholly owned subsidiary mode and deploy a higher percentage of expatriates, whereas larger subsidiaries tend to choose the joint venture mode and use a lower percentage of expatriates; and that Japanese subsidiaries are more likely to have a local manager, and this tendency may be stronger for larger subsidiaries. The theoretical and practical implications of these findings are discussed from a density dependence theory perspective.

Keywords

density dependence theoryentry modeexpatriate staffingFDI legitimacyinstitutional theorystrategic choice密度依赖理论投资进入模式外派人员编制外资正当性战略选择制度理论。
Type
Articles
Information
Management and Organization Review , Volume 3 , Issue 3 , November 2007 , pp. 373 - 396
Copyright
Copyright © International Association for Chinese Management Research 2007

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