Regional competitiveness for attracting and retaining foreign direct investment: a configurational analysis of Chinese provinces

Abstract

This study examines the entry and exit of multinational enterprises (MNE) across regions in China. We explore the configurations of regional economic and institutional factors that attract and retain MNEs. We analyse the strategic entry and exit of MNEs in 31 Chinese provinces during 2001-2007. Our fuzzy-set qualitative comparative analysis (fsQCA) reveals multiple regional competitiveness profiles, as configurations of economic and institutional conditions, that are associated with a large scale of MNE entries and/or exits. In general, our findings suggest that it is the collective influence of Porter's (1990) diamond factors, rather than individual conditions, that contributes to the attractiveness of a regional market to foreign investors. Specifically, we find that while MNEs tend to exit regions with deficiencies in economic conditions, they are attracted to regions with favourable economic conditions and low state intervention, which also results in heightened market competition that results in restructuring of foreign investors.

The competitive advantage of regions: economic geography and strategic management intersections

“…Interestingly, their focus is on how regulations and professional practices bind actors together and may be geographically concentrated. Finally, other studies focus on subnational regions and provinces (Bailey et al, 2019), such as within Italy (Berman, Marino, & Mudambi, 2019) or China (Cui, Fan, Li, & Choi, 2019). Of course, several studies continued to focus on the national unit of analysis in the data collection and segmentation, but we felt this subnational focus was noteworthy and reflective of a growing trend (Peng & Beamish, 2019;Zheng Zhou, Poppo, & Yang, 2008) toward more granular geographical considerations in strategy research.…”

“…Asmussen et al (2019), for example, highlights factors such as the cosmopolitanism of a municipality and the concentration of knowledgeintensive industries. Cui et al (2019) are concerned about politics, including how government sets conditions that transmits and amplifies the influence of policy settings. Berman et al (2019) highlight the importance of global linkages.…”

How FDI attracted? A Configurational Analysis for Regional Competitiveness in Mechanism of FDI Entry and Exit: Evidence from China

“…In parallel with above theories, Economic Geography focuses on isolating the most in uential regional factors from a mount of visual data (Cui et al, 2019;Stallkamp et al, 2018). In perspective of Economy, those research with speci c economic data (e.g.…”

“…Diamond model is an interactive system, its outcome not relying on single element, and a certain element could in uence on the state of others, then outcome (Cui et al, 2019;Ragin, 2009). Results do come from the mutually in uence in system and interactivity of multiple conditions.…”

“…Supporting industries and intermediary is a contributing factor to regional competitiveness in diamond model (Cui et al, 2019;.…”