Political risk, cultural distance, and outward foreign direct investment: Empirical evidence from large Chinese firms

The internationalization of Chinese enterprises is a subject that is receiving increasing attention in international business research. This paper analyzes the influence of political risk and cultural distance on the location patterns of large Chinese companies. Our results show some characteristics that differ from the conventional wisdom. A high political risk in the host country does not discourage Chinese multinationals. However, from a more conventional point of view, the presence of overseas Chinese in the host country is positively associated with Chinese outward foreign direct investment (FDI). In addition, firm size and the volume of Chinese exports to the host country have a positive influence.