Family Involvement On Foreign Direct Investment Mode Choice

Family firms occupy a pivotal position in both quantity and economic scale.With the deepening of the process of economic globalization and the increasing global competition,more and more family firms are participating in international business activities,allocating resources on a global scale and seeking new growth.How to enter the host country market is at the core of their strategic decisions,when companies decide to invest overseas.Previous studies have shown that different overseas investment modes mean that companies have different levels of resource commitment,control and risk to overseas subsidiaries.Therefore,in the context of economic globalization,the study of the choice of foreign direct investment modes of Chinese family firms has very important theoretical and practical significance.This paper focuses on the impact of family involvement on investment modes choices,and verifies the role of important factors such as the internationalization experience of the enterprise and the host country institutional environment.In this paper,first we review the definitions of foreign direct investment modes and family involvement,and related research through literature review,then determines the research problems of this paper.Secondly,this paper further focuses on the factors influencing the family's involvement in the choice of foreign direct investment modes.This paper regards internationalization experience of the enterprise and the host country institutional environment as a moderating variable and adds it to the model to verify the moderating effect of internationalization experience and host country institutional.Finally,taking the 304 overseas investment events listed on the Main Board and the Growth Enterprise Market published by the Ministry of Commerce as a sample,the paper deeply studies the influence of family involvement on the choice of foreign direct investment modes and verifies the internationalization experience and the regulatory role of the host country institutional.The empirical results show that:(1)family management involvement is significantly positively correlated with the greenfield establishment mode and the wholly-owned entry mode;(2)family ownership involvement is significantly positively correlated with the greenfield establishment mode;(3)internationalization experience as the moderating variable,it will weaken the positive relationship between family management involvement and corporate greenfield investment establishment mode and wholly-owned entry mode;(4)internationalization experience will weaken the positive relationship between family ownership involvement and corporate greenfield investment establishment mode;(5)host country institutional environment as the moderating variable,it will weaken the positive relationship between family ownership and the wholly-owned entry mode;This paper verifies the impact of family involvement on the outward foreign investment mode of Chinese family firm as well as the moderating role of international experience and host country institution within it through theoretical carding and empirical researching,which not only fills the gap of this research,but also provides theoretical guidance and reference for Chinese family firms in advancing the internationalization strategy.