| In recent years, the drastic changes in the layout of the global economy have made the "BRICS", commonly known as the representatives of emerging economies, the major force in motivating the rapid growth of direct foreign investments. China, as one of the five members of the "BRICS", introduced the strategy of "going global" in 2000; since then, direct foreign investments prospered at an exponential rate. This article uses Chinese foreign direct investment in the genuine business world as background, and takes its standpoint from the perspective of integrating Transaction Cost Theory, Institutional Factors and Internationalization Stage Theory. The article brings national factors and corporate factors into elements that are influencing the theoretical framework of the entry mode of Chinese enterprises. The present intent is to explore the following two questions:First, during the Chinese foreign direct investment process, is political risk a major factor that influences the decision of enterprises? Second, is international experience a manipulated variable to political risk?In order to answer the above questions, this study builds upon the perception of relevant national and international literatures. It also takes all obtained data, which possess the characteristics of a nested relationship, into consideration. In an effort to build a cross-level model, which will be used to study the determinants for Chinese enterprises, that directly invest in foreign enterprises. Through the research on 829 non-financial subsidiaries that belong to enterprises that are located in Shanghai and Shenzhen area, the study draws following conclusions:(1) The political risk significantly influences the choice of entry mode. In a narrower sense, the higher the stability of the government, the more corruption is outlawed, the more perfected the regulations are, and the higher the quality of governance the higher is the probability for Chinese companies to choose a sole proprietorship than a joint one.(2) International experience reversely regulates the relationship between political risk and entry mode. Specifically, in a country whose government is stable, a country that fights corruption, a country that establishes decent laws, and a country that has impeccable government management system, Chinese companies that are adequate in international experience are more likely to choose a sole proprietorship.Finally on the basis of theoretical and empirical research conclusions, this study will put forward some suggestions from two levels of government and enterprises for Chinese multinational corporations, and for others researchers about how to research in a better way in the future. |
