The research presented in this chapter investigates the effect of both host and home institutional factors on emerging market multinational corporations’ choice of location for overseas investments. Drawing from prospect theory and recent theoretical development, we propose that cultural distance and host regulatory quality contribute to the attractiveness of a country, while home government relationship moderates the effect of host regulatory quality, and such effects vary across countries at different stages of economic development. Based on the data from overseas subsidiaries of Chinese multinational corporations, both cultural distance and host regulatory quality positively affect location choice. For less developed countries, there is a negative interaction between cultural distance and host regulatory quality, and home government relationship positively moderates the effect of host regulatory quality.
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