A Study On The Embedding Model Underinstitutional Distance To Avoid The Risks Of Foreign Direct Investment

Since the "Belt and Road" cooperation initiative was proposed in 2013,China’s mainly state-owned enterprises have invested overseas,but with the gradual increase of the scale of China’s foreign direct investment,the continuous extension of investment fields and the gradual diversification of location distribution,the institutional environment risks faced by overseas enterprises are increasingly prominent,and the degree of uncertainty of the competitive pressure and external environment they face is increasing,which has brought direct impact and impact on the survival and growth of enterprises.It restricts and hinders the process of foreign investment by China’s state-owned enterprises.Emerging markets have great development potential and complex and changeable institutional environment,and the differences in dynamic and complex institutional environments between home countries and host countries not only put forward higher requirements for the practical activities of enterprise internationalization,but also pose greater challenges to the research of enterprise internationalization theory.Based on the above background,this study takes the avoidance of OFDI risks through the selection of embedding modes as the core research objective,explores the theoretical sources and theoretical basis related to the embedding mode under institutional distance and OFDI through literature review,analyzes the connotation,composition dimension and analysis framework of the embedding mode under institutional distance on OFDI,conducts research design and empirical analysis,and then proposes the implementation path of the choice of embedding mode under institutional distance to avoid OFDI risks.The theoretical source and theoretical basis lay the cornerstone for studying the embedding model and OFDI risk under the institutional distance.This study summarizes and analyzes the theory of transnational business uncertainty under institutional distance,the development process of embedding theory,the core viewpoint and its role and enlightenment in the construction of theoretical analysis framework for OFDI risk,and constructs the theoretical basis of embedding mode and OFDI risk research under institutional distance.The conceptual connotation definition and analysis framework analysis builds an analytical paradigm for embedding mode under institutional distance and OFDI risk research.Based on the relevant theoretical basis,this study clarifies the connotation and composition dimension of institutional distance and embedding mode,focuses on improving the embedding mode to avoid OFDI risk,constructs a spatial economic model of embedding mode and OFDI risk under institutional distance,establishes the correlation between embedding mode and OFDI risk,constructs an analytical framework,and explains it.Theoretical and empirical analysis clarify the mechanism of the impact of embedded models on OFDI risk under institutional distance.Based on the analysis framework of this study,a theoretical model of the evolution process of the embedding mode under institutional distance is constructed,the factors affecting the evolution are analyzed,and the evolution process of the embedding mode(passive adaptation stage → active adaptation stage → independent innovation stage)is described → the evolution process of "passive embedding" → "active embedding",and the evolution process is further analyzed by factors such as institutional distance and the enterprise’s own capabilities and resources.At the same time,a multi-scale element subject behavior strategy evolution game model under institutional distance is constructed,and empirical analysis reveals the feasibility of the "multi-scale" embedding model.Based on the analysis of the research hypothesis of the impact of the embedding mode under institutional distance on the risk of OFDI,the theoretical model is constructed,and through the analysis of the evolution process of the embedding mode of the East Railway project,the uncertainty of cross-border operation and the risk of OFDI,the results show that the increase of transnational operation uncertainty leads to OFDI risk.The single-scale embedding model raises OFDI risks by increasing cross-border operational uncertainty;The multi-scale embedding model avoids OFDI risks by reducing cross-border operational uncertainty;It is feasible to measure informal institutional distances with crossborder business uncertainty.Therefore,in the process of investing in emerging market countries,China’s state-owned enterprises should try to avoid adopting the "single-scale" embedding model,and instead learn from the "multi-scale embedded" model,overcome the uncertainty of transnational operations under institutional distance,avoid the risk of outward direct investment,and carry out diversified institutional innovation in the face of the complex and changeable political and economic environment of emerging market countries,embed them in the host country market from international,national,local,public and other scales,and integrate various factors.Timely dynamic adjustment according to changes in the environment and factors,taking into account the interests of various interest groups,actively fulfilling social responsibilities,reducing uncertainty from all scales,and ultimately winning the win-win situation of the host government,local enterprises and local people,puts forward feasible suggestions for China’s state-owned enterprises to invest in emerging market countries in the future to overcome the uncertainty of transnational operations under institutional distance and avoid the risk of OFDI,which has certain practical significance.