Firm's OFDI And Domestic Investment Or Divestment Decision

Outward Foreign Direct Investment not only has a profound impact on China's economic development,but also causes some concerns,in other words,ofdi may reduce the domestic investment level of enterprises while enhancing their international operation capability.Generally speaking,OFDI requires the input of domestic capital,and may also transfer the production activities of enterprises to foreign countries,which leads to the flow of domestic capital to foreign countries and the reduction of domestic investment.In particular,when multinational enterprises shift their strategic focus to foreign countries,give priority to serving and expanding foreign markets,domestic subsidiaries will get less resources input and may even encounter the risk of divestment.The academic circle has long paid attention to the issue of the impact of OFDI on domestic investment,but most existing literatures have studied from the perspective of the change of fixed asset investment,and the conclusions obtained are inconsistent.This paper argues that,compared with the increase or decrease of fixed asset investment,the attention paid to the increase or decrease of enterprise subsidiaries can better capture the strategic trend of enterprises and better reflect the social significance of OFDI's domestic influence.Therefore,this paper,on the basis of existing macro research and in combination with the characteristics of the internal network of enterprises,discusses the influence of the relationship between sub-companies and parent-subsidiary companies on the domestic investment divestment decision of OFDI from a micro perspective from the perspective of theory and demonstration.Theoretically,the internal network of multinational enterprises is mainly reflected by the parent-subsidiary relationship and the relationship between subsidiaries.There is competition between subsidiaries at home and abroad for resources,business authorization and product market of the parent company.At the same time,mutual cooperation is realized through resource sharing,knowledge sharing and division of labor.Different competition and cooperation relations determine that OFDI will induce different domestic investment or divestment decisions.In addition,the co-opetition relationship of subsidiaries is often realized under the coordination of the parent company.The equity association,executive association and geographical distance between the parent company and its subsidiaries will have an indirect impact on the subsidiary relationship,so as to adjust the direction of OFDI's domestic investment or divestment decision.Based on the data of domestic and foreign subsidiaries of Chinese A-share manufacturing listed enterprises from 2008 to 2017 collected manually,this paper adopts the fixed effect model,and empirically analyzes the influence of Chinese enterprises' OFDI on their investment and divestment decisions in China from the perspective of enterprise internal network.The research results show that.on the whole,OFDI will promote investment decisions in China,the relationship between home and foreign subsidiaries is cooperative.The results of partial sample analysis show that OFDI can promote the domestic investment decisions of capital-intensive enterprises and non-state-owned enterprises,but has no significant influence on labor-intensive enterprises and state-owned enterprises.Secondly,from the perspective of the moderating effect of parent-subsidiary relationship,the senior executives'association between the parent company and the domestic subsidiary can positively promote the domestic investment effect of OFDI.The geographical distance from the domestic subsidiary has no significant influence on the domestic investment effect of OFDI,and the equity association with the overseas subsidiary can lead to the divestment effect in China of OFDI.