Macroeconomics

Biology

Resource dependence theory

Statistics

Microeconomics

Foreign direct investment

Panel data

Economics

Computer science

Business

International trade

Computer network

Paleontology

Economic geography

Emerging markets

Mathematics

Monetary economics

Profitability index

Stage (stratigraphy)

Econometrics

Internationalization

Matching (statistics)

Industrial organization

International economics

Finance

Financial crisis

Resource (disambiguation)

Journal of World Business

We investigate the effect of conducting FDI on the profitability of emerging economy firms in early stage internationalization. We argue that FDI can be an effective strategy to alleviate liabilities of emergingness, thus generating positive performance outcomes. We hypothesize that, contingent on factors altering motivation and capability of firms to diversify from home resource dependence, emerging economy firms can benefit from conducting FDI, resulting in a greater rate of intangible assets growth and enhanced profitability. Using panel data of Chinese firms prior to the global financial crisis, and through combining matching techniques with difference-in-difference analysis, we find empirical support for our arguments.

Outward FDI and profitability of emerging economy firms: Diversifying from home resource dependence in early stage internationalization