Analysis Of The Influence Of Foreign Direct Investment On Enterprise Performance

Enterprise performance serves as the cornerstone of enterprise development.It is of great significance to discover the influencing factors of enterprise performance and give relevant suggestions for its improvement.In the past 40 years of reform and opening up,foreign investment has played an important role in China's industrial upgrading and China's economy has been developed rapidly with the help of foreign direct investment and the enterprise development has also shown a rapid growth.Meanwhile,foreign direct investment has exerted a positive influence on the improvement of China's enterprise performance.For example,foreign businessmen will bring a great deal of working capital and advanced management measures when they set up companies in China.In terms of technology,as China has been remaining the developing stage,many relevant technologies are not well-developed.Therefore,foreign direct investment has become an important part of China's advanced technical channels.However,everything has its double-sided effect.Although foreign direct investment has brought benefits to the technological development of Chinese enterprises,it has led to some negative consequences such as market monopoly.Therefore,in the context of China's stable economy,how to use foreign direct investment to improve the performance and competitiveness of domestic enterprises while reducing the harm to local enterprises is the key point of the study that the impact of foreign investment on enterprise performance should be analyzed.This paper attempts to analyze the spillover effect of foreign direct investment on Chinese listed companies and its impact on domestic enterprise performance.In the theoretical research,this paper firstly analyzes the influencing factors of enterprise performance and related channels of foreign direct investment,and further analyzes the mechanism of foreign direct investment on enterprise performance on the basis of its theory.This paper finally concludes that the improvement of enterprise performance can be improved if foreign direct investment is introduced reasonably.However,excessive introduction of foreign direct investment will impede the technology upgrading of the domestic enterprises,and then it will have an adverse impact on China's enterprise performance.On the basis of theory,this paper selects relevant panel data of 30 provinces in mainland of China from 2006 to 2017,constructing an econometric model,taking enterprise performance as the explanatory variable and foreign direct investment as the core explanatory variable.The Tobin Q,current ratio,asset-liability ratio,cash flow,firm size,etc.are taken as control variables,being added into the model,and then this paper studies the influence of foreign direct investment on the enterprise performance through regression analysis with the fixed-effect model.The results show that foreign direct investment has a negative effect on enterprise performance at a national level.But in order to analyze the impact of foreign direct investment on different regions of China in a more detailed way,this paper also conducts a group discussion on the central and western region of China respectively.Finally,it draws a conclusion that the absorption capacity of the spillover of foreign direct investment differs a lot in different regions.It is noticeable that the investment has a significant role in promoting the development of the central region.Finally,based on the research results,this paper makes an attempt to put forward several policy proposals: First,relevant decision-making departments should combine foreign direct investment with other domestic economic reform policies to take the full advantage of foreign investment,so as to bring economic benefit;Second,with the increasing economic development in the eastern region,China should increase the introduction of foreign direct investment in the central and western regions,and further increase the spillover effect of foreign investment in the two regions on the performance of local enterprises;Third,intervening and controlling measures of governments at all levels should be limited and enough freedom should be given to the market.