Re-evaluating the impact of institutional distance on the location choice and success of foreign Investors : comparing Chinese and Western investors in Africa

Abstract

This dissertation seeks to add to our understanding how the internationalization process of Chinese firms relates to the internationalization process of Western firms. The focus of this project was on the assumed competitive advantage for Chinese firms in relatively high-risk host countries. In the first part of my study I use a conceptual framework presented by Child and Marinova (2014) to study the role of institutional distance for the location choice of Chinese and U.S. firms. Contrary to popular believe, I found that Chinese investments are not directed to countries with a low level of IM and investments from both China and the U.S. are directed to countries with a low level of political stability. In the second study I use process tracing to further study the causal mechanism that could explain how the levels of political stability and institutional maturity in China could give Chinese firms an advantage in high-risk emerging markets far away from China. The combination of the two studies shows that the success of Chinese firms in challenging host markets depends on much more than push factors only.