Multi-Level Determinants of Initial and Sequential Investments in China by Korean Firms

Multi-Level Determinants of Initial and Sequential Investments in China by Korean Firms

In this research, multi-level determinants that impel the fum s actions both in the context of initial investment and sequential investment were explored In addition, the authors tried to build a linkage between the initial investment and sequential investment to ascertain the different determinants. Data for 125 Korean small and medium sized enterprises doing business in China were used. According to empirical results, in the case of initial investment, findings revealed that fums which have previous international experience in foreign countries, with an advantage in specific capabilities such as capital allocation and R&D, and which are culturally close are more likely to do initial investment in China. As for sequential investment, it was shown that a firm s operations are better after its initial investment. Furthermore, the more same industry competitors invested in China, the more sequential FDI in China poured in be taken by Korean firms. Although the relationship between the firms marketing ability and the determinant of initial investment was not established in the study, the authors ascribe it to the varying behavior in the Korean firms investment strategies. Thus, there is a close relationship between the initial and sequential investment; however, some determinants differ in initial investment and sequential investment.