Political hazards and entry modes of Chinese investments in Africa

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

11 Scopus Citations
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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)39-61
Journal / PublicationAsia Pacific Journal of Management
Volume35
Issue number1
Online published28 Jun 2017
Publication statusPublished - Mar 2018
Externally publishedYes

Abstract

Africa has achieved the fastest growth rate of inward foreign direct investment (FDI) recently. Yet heightened political hazards present substantial challenges to foreign firms in Africa. This study examines the entry strategies that firms may take to mitigate such hazards by exploring the relationship between political hazards and entry mode choices in Africa. We further consider how an investing firm’s host country experience and foreign aid provided by its home country government to host countries in Africa can influence this relationship. In a sample of listed Chinese firms’ investments in Africa from 2000 to 2014, we find that Chinese firms tend to use the joint venture mode when political hazards are high in an African country. This relationship is weakened when they accumulate host country experience and when the Chinese government’s foreign aid to an African country increases. Our findings point to firm-level strategies to mitigate political hazards as well as instruments available to home country governments to help their multinational firms operating in host countries characterized by unstable political environments.

Research Area(s)

  • Africa, China, Entry mode, Foreign aid, Foreign direct investment, Political hazards

Citation Format(s)

Political hazards and entry modes of Chinese investments in Africa. / Lu, Jane Wenzhen; Li, Wen; Wu, Aiqi; Huang, Xueli.

In: Asia Pacific Journal of Management, Vol. 35, No. 1, 03.2018, p. 39-61.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review