The motives of FDI: a case of Chinese SMEs

Rose Quan, Joanne Roberts

Research output: Contribution to conferencePaperpeer-review


The motives stimulating foreign direct investment (FDI) is a topic of intense interest in the field of international business. Studies predominately focus on multinational enterprises (MNEs) from the Western developed countries. However, in the recent years outward FDI from developing countries, such as China and India, has been increasing. In addition, the fast changing global business environment and technology advances have increased the ease with which small and medium sized enterprises (SMEs) can access customers and suppliers both domestically and internationally. Although attention has been paid to the outward FDI from developing countries firms, further in-depth investigation of this phenomenon is required, especially, in relation to SMEs. Given the increased Chinese outward investment in the recent years, this paper sets out to advance knowledge of the internationalisation of Chinese SMEs(CSMEs). The main research objective is to explore the motives of outward FDI with specific focuses of why CSMEs managers decided to enter the North England? In what sense does the home country context of China influence such outward investment decisions? Addressing these questions will contribute to the existing understandings of the motives driving OFDI by CSME directed towards developed countries. This study employs a social constructionist approach to interpret the CSME decision makers' unique experiences and perceived values in determining their international business decisions. We empirically examined the motivations behind CSMEs' decisions to investing in the North of England via semi-structured interviews. 15 CSME managers in the North of England participated. The qualitative interview data was analysed through template analysis. Drawn largely from the primary interviews of CSMEs operating in the North of England, this paper concludes that the decision of CSMEs to initiate its internationalization (especially entering the Western developed countries) can be explained by combining different international theories. The results indicate three elements underpinning a CSMEs decision to enter the North of England: 1) the institutional environment in the home country (China) play an important role in promoting CSMEs' international expansion, 2) government support and networks in the host country are crucial factors in attracting CSMEs to the North of England, and 3) CSME managers' personal traits, such as risk-taking, ambitions and experience, along with strategic intentions, have significant impact on the existence of new international ventures for CSMEs. The findings of this qualitative study imply that new international ventures are fuelled increasingly by SMEs. Although those SMEs have limited resources, they still attempt to discover business opportunities in different countries. It is believed that this study provides valuable insights for international researchers,practitioners, and policy makers. It offers alternative understanding of the international experience of SMEs and contributes to practice grounded in an Asian SME context. It is hoped that the findings and insights drawn from this research paper provide practical guidance for SMEs managers engaged in international expansion decisions.
Original languageEnglish
Publication statusPublished - Apr 2011
Event38th AIB-UKI (UK & Ireland Chapter) Conference - Edinburgh, UK
Duration: 1 Apr 2011 → …


Conference38th AIB-UKI (UK & Ireland Chapter) Conference
Period1/04/11 → …
Internet address


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