Which Institutional Factors Matter?
Pictured: Frank McDonald (right) John Anchor (left)
Tue, 24 Jun 2014 11:32:00 BST
The case of R&D Investment in China
The Business School’s Emerging Markets Research Group heard Professor Frank McDonald from the University of Liverpool, present a paper with the above title.
Professor McDonald has a rich academic and industrial experience and his main areas of research interest are strategic development of foreign owned subsidiaries, influence of geographical factors on FDI and MNC strategies, institutionalisation economics approach to obstacles to internationalisation in developing countries, and obstacles to SME internationalisation.
His paper investigates the influence of formal and informal institutional obstacles on R&D investment by foreign and domestic firms in China. It considers the impact of institutional obstacles at national and sub-national level and develops hypotheses based on a new institutional economic approach that takes account of key factors identified in the new institutional sociology. The hypotheses are tested using data from World Bank surveys.
The results reveal that for foreign firms formal institutional obstacles exert a positive effect on R&D investments and informal ones exert a negative effect. Neither formal nor informal institutional obstacles exert an influence on domestic firms at national level. At city region level the effects on foreign firms follow the same direction as in the case of the national level, but the magnitude of the effects is different and in some city regions there are no effects on foreign firms. For domestic firms there is evidence of negative influences on R&D investment in some city regions from formal institutional obstacles.
The paper considers some of the main strategic and policy implications of the results. It was noted in particular that the major regional differences in China are an area for further research, particularly given the power of the Regional Secretaries of the Chinese Communist Party.
Dr John Anchor, Director, Emerging Markets Research Group, says “we were delighted to receive Professor McDonald at Huddersfield since he is one of the UK’s leading scholars in International Business. He is currently Co- Chair of the British Academy of Management’s Special Interest Group in International Business and Co- Chair of the UK and Ireland Chapter of the Academy of International Business”.
