Effects of Chinese firms’ Governance Structure on Subsidiary Equity Level Choice in EU Region : Focused on CEO Perspective

다국어 초록 (Multilingual Abstract)

Over the recent years, the world has seen a rapid expansion of China’s foreign direct investment (FDI). European Union (EU), one of the world’s largest economies, is of a particular interest here, as it has enjoyed a tremendous increase in FDI inflow from China since the start of the new century. Chinese companies are keen on extending their businesses to EU. When these firms go to EU, they are faced with the task of choosing the right equity level. This paper contributes to our understanding of the internationalization process by examining the determinants of equity level choice by Chinese firms in EU. The paper also seeks to determine whether there will be a difference in the equity level choice for the state owned and non-state owned enterprises of Chinese firms entering into EU. In a bid to answer these questions, this paper focused on three sets of variables; firm specific, host country environment and home country related factor. These factors have all been addressed in different previous studies on internationalization. The results of empirical analysis show that international experience, industry competition and market potential have significant effect on Chinese enterprises entry in EU. Other factors such as R&D ability, marketing ability, and country risk are insignificant. The results also reveal that there is significant difference between Chinese state-owned and non-state owned enterprise when they invest in EU. These findings have meaningful implications for understanding the internationalization behaviors of Chinese firms.

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