| Since the reform and opening up,foreign-funded enterprises have gradually become one of the important economic entities to promote China’s economic development.The actual utilization of foreign investment in China is increasing yearly.The latest world investment report shows that the flow of foreign investment in China reached 139 billion us dollars in 2018,ranking the second in the world.How to provide quality services for a large number of foreign enterprises,to create a good business environment,in order to maintain the continued attraction of the Chinese market for foreign enterprises is a key problem to be solved in economic development.Government departments,as the makers and implementers of foreign investment policy,play a very important role in the whole process of the entry and development of foreign investment.From the perspective of local officials’ governance,this paper explores the influence of officials’ characteristics on the location choices and performance of foreign companies’ subsidiaries in China and investigates the possible moderating factors to deeply understand their internal mechanisms.There have been numerous studies on local officials’ governance,location choice,and foreign subsidiary performance.On the one hand,the research on local officials’ governance focuses on the impact on the strategic behavior of domestic enterprises,while relatively ignores the impact on the strategy and performance of foreign enterprises.On the other hand,studies on foreign location choices and subsidiary performance in the field of international business focus on the effect of regional political factors at the macro level and relatively ignore the impact of local officials’ heterogeneity on enterprises’ international expansion.In order to fill the gaps of existing research,this paper,based on the literature analysis,adopts the empirical research method,respectively discusses the influence of the turnovers of local officials,the diversity of local officials’ rotations on the location choices of foreign companies’ subsidiaries,and the influence of the tenure of local officials on the performance of foreign subsidiaries.The main research contents of this paper are as follows:First of all,domestic and foreign literature are sorted out,mainly including the research on the consequences of local officials’ governance,the antecedents of location choices of foreign subsidiaries and their performance.Among them,the governance of local officials is mainly carried out in terms of the turnovers of local officials,the rotations of local officials and the tenure of local officials,and the impact on enterprises,industries,and regions are analyzed.The literature review on the antecedents of foreign location choices and subsidiaries’ performance also mainly covers the enterprise,industry and region level.On the basis of the literature review,the existing research is summarized and reviewed,and the existing research deficiencies are found,and then the main research questions of this paper are refined.Secondly,through three empirical studies,this paper studies the influence of local officials’ governance on location choices and performance of foreign subsidiaries in China.The first sub-study adopts the data of fortune 500 foreign enterprises in Chinese cities from 1998 to 2011 and uses the conditional logit model to investigate the relationship between the turnovers of local officials and the location choices of foreign subsidiaries in China,and analyzed the moderating roles of the tenure of previous officials and industry supervision.The study finds that the turnovers of local officials reduced the possibility of foreign investment,and the negative impact of the turnover be weakened in cities when previous officials’ tenure is longer and in industries with less regulation.The second sub-study adopts the data of fortune 500 foreign enterprises in China on the prefecture-level from 1998 to 2011,using the logit model to test the relationship between the diversity of officials’ rotations and foreign subsidiaries’ location choices,and analyzes the moderating roles of the number of years left before official retirement,corruption,and foreign investment experience.It is found that the diversity of local officials’ rotations is beneficial to the improvement of the possibility of foreign investment.At the same time,the positive effect of the diversity of officials’ rotations on foreign investment is enhanced when the remaining years of official retirement are at the moderate level,the degree of corruption is low and foreign investors have less investment experience in cities.The third sub-study adopts the annual industrial survey database from 1998 to 2007 and uses the fixed effect model of panel data to investigate the relationship between the tenure of local officials and the performance of foreign subsidiaries,and analyzes the moderating effects of firm size,regional marketization,and corruption.we find that the longer the tenure of local officials,the better the performance of foreign subsidiaries.At the same time,the smaller the size of the enterprise,the lower the regional marketization and the lower the degree of corruption,the positive impact of official’ tenure on the performance of foreign subsidiaries is enhanced.Finally,from the theoretic and practical aspects,this article integrated the literature of local officials’ governance and enterprise internationalization strategy,the research conclusion brings beneficial references to the local government departments for regulation design and the foreign enterprise for foreign strategy choice and performance.As the local officials’ governance is a two-sided sword,both governments and enterprises need to strike a balance to better achieve their goals.In addition,from the theoretical and empirical aspects,this paper points out the research limitations and future research directions.Future research can start from other local officials’ characteristics or use different samples to further investigate this study. |
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