How does OFDI in Developed Economies Benefit EEFs? A Composite View of Market and Nonmarket Strategy

Emerging economy firms (EEFs) aggressively make outward direct investments in developed economies (OFDI-in-DE) that have received both attention from scholars and practitioners. However, current IB scholars mainly take EEFs’ OFDI-in-DE as their market strategy to pursue strategic assets in developed countries to recursively increase their competitiveness in the domestic market. What is missed is that EEFs’ OFDI-in-DE could be their nonmarket strategy. Based on the springboard theory and social exchange theory, we argue that EEFs’ OFDI-in-DE is not only conducive to their domestic technological innovation as a market move, but also facilitates EEFs’ entry into domestically regulated industries as a nonmarket strategy. Furthermore, these relationships are moderated by managers’ political connections and technological experience, respectively. Our proposals are supported by 13309 firm-year observations of Chinese publicly listed firms from 2010 to 2018. It provides new sights into how EEFs’ OFDI-in-DE can be a composition of market and nonmarket strategies.