Revisiting FDI Strategies and the Flow of Firm‐Specific Advantages: A Focus on State‐Owned Enterprises

• Author: Dana Wang,Bruce C. Rudy,Stewart R. Miller
• DOI: http://doi.org/10.1002/gsj.1106
• Published date: 01 February 2016
• Date: 01 February 2016

REVISITING FDI STRATEGIES AND THE FLOW OF

FIRM-SPECIFIC ADVANTAGES: A FOCUS ON

STATE-OWNED ENTERPRISES

BRUCE C. RUDY1*, STEWART R. MILLER1, and DANA WANG

1College of Business, The University of Texas at San Antonio, San Antonio,

Texas, U.S.A.

Plain language summary: Research on the motivations driving multinational enterprises

to

undertake foreign direct investment(FDI) has largely ignoredstate-owned enterprises (SOEs).

In

this article, we consider the unique motivationsof SOEs and demonstratethat such

organizations

are more likely to undertake FDI in host (foreign) countries withthe goal of acquiring unique

resources and capabilities that can subsequently be returned to the SOE’s home country.

This

strategic behavior is distinct from the FDI of multinational enterprises,which typically leverage

their resources and capabilities in their home countries to expand intohost (foreign)

countries.

Technical summary: The international businessliterature has focused on foreign direct

invest-

ment (FDI) strategies that involver esource seeking, market seeking, and efficiency seeking.

Although scholars have introduced the notion of strategic asset-seeking FDI,questions

have

beenraisedaboutthefeasibility ofthis FDI strategy and the nature of the flows of firm-specific

advantages (FSAs) stemming from it. The present study seeks to address this gap in the

literature by identifying new strategic asset-seeking FDI strategies and the FSA flows

associ-

ated with them. Because of their unique locational advantages,we contend that the proposed

FDI strategies are particularly feasible for state-owned enterprises (SOEs).

We discuss each

new FDI strategy using case illustrations of SOEs. Copyright © 2016 Strategic Management

Society.

INTRODUCTION

Research on foreign direct investment (FDI) has a

long, rich tradition that has provided the foundation

for theories of the multinational enterprise (e.g.,

Buckley and Casson, 1976; Dunning, 1977, 1992;

Hennart, 1982; Rugman, 1981; Rugman and

Verbeke, 2001; 2003). Within this research stream,

the concept of location has played a major role as

multinational enterprises (MNEs) make FDI deci-

sions that take into consideration the possession of

firm-specific advantages (FSAs)1and the nature of

country-specific advantages. The FDI literature has

identified several FDI strategies: resource seeking,

market seeking, efficiency seeking, and strategic

asset seeking (Dunning, 1992). While the first three

FDI strategies arise when either host country advan-

tages or both host country advantages and FSAs are

strong, strategic asset seeking is thought to arise

when FSAs are weak, suggesting that location plays

an especially important role with this form of FDI

(Rugman, 2010).

Keywords: FDI strategies; firm-specific advantage;state-owned

enterprises; location-bound resources; nonlocation-bound

resources

*Correspondence to: Bruce C. Rudy, College of Business, The

University of Texas at San Antonio, One UTSA Circle, San

Antonio, TX 78249, U.S.A. E-mail: bruce.rudy@utsa.edu

1FSAs refer to ‘knowledge bundles that can take the form of

intangible assets, learning capabilities and even privileged rela-

tionships with outside actors’ (Rugman and Verbeke, 2003:

127).

Global Strategy Journal

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/gsj.1106

Copyright © 2016 Strategic Management Society

Global Strat. J., 6: 78 (2016)

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