Events

Prof. Yan Anthea Zhang
Fayez Sarofim Vanguard Professor of Management
Jesse H. Jones Graduate School of Business
Rice University

Prior literature has documented that firms imitate others in entering new foreign markets. We advance this line of research by examining imitation between state-owned enterprises (SEOs) and non-SEOs. We argue that SEOs receive support from their home country government in foreign markets, which may be spilled over to non-SOEs from the same home country, and as a result, non-SOEs tend to follow SOEs in their foreign market location choices. We further argue that this relationship will be stronger in host countries have high political risk since non-SEOs have stronger need for home country government’s support in politically risker host countries. Moreover, we argue this positive interaction effect will become weaker when the host and home countries have weaker diplomatic ties since the home country government’s support is less useful, if not harmful, in the host countries. With data on Chinese non-SOEs’ foreign direct investment (FDI) location choices in 2001-2013, we find strong empirical evidence to support these propositions. Our study can contribute to the literatures on FDI location choices, inter-firm imitation, SOEs, and the interplay between firms and government.