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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...

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Main Authors: Chen, Jen Eem, Chin, Lee, Law, Siong Hook, Wan Ngah, Wan Azman Saini
Format: Article
Language:English
Published: Institute of Business Excellence and UiTM Press 2016
Online Access:http://psasir.upm.edu.my/id/eprint/53473/1/Outward%20FDI%20and%20institutional%20factors.pdf
http://psasir.upm.edu.my/id/eprint/53473/
http://www.jeeir.com/v2/index.php/30-current/2016/vol-4-no-3-2016/133-paper5-vol4-no3-2016
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spelling my.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
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
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.
format Article
author Chen, Jen Eem
Chin, Lee
Law, Siong Hook
Wan Ngah, Wan Azman Saini
spellingShingle Chen, Jen Eem
Chin, Lee
Law, Siong Hook
Wan Ngah, Wan Azman Saini
Outward FDI and institutional factors: Malaysian experience
author_facet Chen, Jen Eem
Chin, Lee
Law, Siong Hook
Wan Ngah, Wan Azman Saini
author_sort Chen, Jen Eem
title Outward FDI and institutional factors: Malaysian experience
title_short 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_sort outward fdi and institutional factors: malaysian experience
publisher Institute of Business Excellence and UiTM Press
publishDate 2016
url http://psasir.upm.edu.my/id/eprint/53473/1/Outward%20FDI%20and%20institutional%20factors.pdf
http://psasir.upm.edu.my/id/eprint/53473/
http://www.jeeir.com/v2/index.php/30-current/2016/vol-4-no-3-2016/133-paper5-vol4-no3-2016
_version_ 1643835404895387648
score 13.211869

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