Outward FDI and institutional factors: Malaysian experience
This paper aims to investigate the role of home country institution in affecting outward FDI from Malaysia using data spans from 1980 to 2012. The model specification is examined in autoregressive distributed lag (ARDL) bounds testing framework. The empirical evidence reveals that GDP, exchange ra...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Institute of Business Excellence and UiTM Press
2016
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| Online Access: | http://psasir.upm.edu.my/id/eprint/53473/1/Outward%20FDI%20and%20institutional%20factors.pdf |
| _version_ | 1796975895227924480 |
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| author | Chen, Jen Eem Chin, Lee Law, Siong Hook Wan Ngah, Wan Azman Saini |
| author_facet | Chen, Jen Eem Chin, Lee Law, Siong Hook Wan Ngah, Wan Azman Saini |
| author_sort | Chen, Jen Eem |
| collection | UPM |
| description | This paper aims to investigate the role of home country institution in affecting outward FDI from Malaysia using data spans from 1980 to 2012. The model specification is examined in autoregressive distributed lag (ARDL) bounds testing framework. The empirical evidence reveals that GDP, exchange rate, openness to trade, and corporate tax rate are the key drivers of outward FDI from Malaysia. This portrays that internationalization strategy of firms is not only relied on home macroeconomic environment, but also home institution. More importantly, corporate tax rate, as one of the institution factors, is positively related to outward FDI which signifies that high tax rate would prompt local firms to engage in investment abroad as a sign of escape response. This reflects that international expansion appears to be exit strategy from home country instead of entry strategy into foreign markets. The findings have some important implications on internationalization strategy of firms. |
| first_indexed | 2024-03-06T09:17:58Z |
| format | Article |
| id | upm.eprints-53473 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T09:17:58Z |
| publishDate | 2016 |
| publisher | Institute of Business Excellence and UiTM Press |
| record_format | dspace |
| spelling | upm.eprints-534732017-11-02T02:18:19Z http://psasir.upm.edu.my/id/eprint/53473/ Outward FDI and institutional factors: Malaysian experience Chen, Jen Eem Chin, Lee Law, Siong Hook Wan Ngah, Wan Azman Saini This paper aims to investigate the role of home country institution in affecting outward FDI from Malaysia using data spans from 1980 to 2012. The model specification is examined in autoregressive distributed lag (ARDL) bounds testing framework. The empirical evidence reveals that GDP, exchange rate, openness to trade, and corporate tax rate are the key drivers of outward FDI from Malaysia. This portrays that internationalization strategy of firms is not only relied on home macroeconomic environment, but also home institution. More importantly, corporate tax rate, as one of the institution factors, is positively related to outward FDI which signifies that high tax rate would prompt local firms to engage in investment abroad as a sign of escape response. This reflects that international expansion appears to be exit strategy from home country instead of entry strategy into foreign markets. The findings have some important implications on internationalization strategy of firms. Institute of Business Excellence and UiTM Press 2016 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/53473/1/Outward%20FDI%20and%20institutional%20factors.pdf Chen, Jen Eem and Chin, Lee and Law, Siong Hook and Wan Ngah, Wan Azman Saini (2016) Outward FDI and institutional factors: Malaysian experience. Journal of Emerging Economies and Islamic Research, 4 (3). pp. 37-48. ISSN 2289-2559 http://www.jeeir.com/v2/index.php/30-current/2016/vol-4-no-3-2016/133-paper5-vol4-no3-2016 |
| spellingShingle | Chen, Jen Eem Chin, Lee Law, Siong Hook Wan Ngah, Wan Azman Saini Outward FDI and institutional factors: Malaysian experience |
| title | Outward FDI and institutional factors: Malaysian experience |
| title_full | Outward FDI and institutional factors: Malaysian experience |
| title_fullStr | Outward FDI and institutional factors: Malaysian experience |
| title_full_unstemmed | Outward FDI and institutional factors: Malaysian experience |
| title_short | Outward FDI and institutional factors: Malaysian experience |
| title_sort | outward fdi and institutional factors malaysian experience |
| url | http://psasir.upm.edu.my/id/eprint/53473/1/Outward%20FDI%20and%20institutional%20factors.pdf |
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