Inward Foreign Direct Investment, Entrepreneurial Behavior, and Outward Foreign Direct Investment: Evidence from China

As a leading foreign investor among all emerging countries, China has been developed to investigate in several studies by focusing on inward foreign or outward foreign investment, respectively. However, limit has been related to the relationship between Inward Foreign Direct Investment (IFDI) and Outward Foreign Direct Investment (OFDI), relying on the evidence from China. As the conditions and variables that characterized the IFDI and OFDI have been overhauled, a new framework is required to evaluate their relationship, relating the role of entrepreneurial characteristics. In this study, on the basis of the planned behavior theory, we investigate the relationship between IFDI, entrepreneurial behavior and OFDI in a structural contingency framework. Collecting China’s panel data set of ten main industrial areas in the period from 2003 to 2012, we first develop the panel unit root tests and Hausman test for the panel data measures. Then, applying the Pooled Regression Model test, we secondly hypothesis and conclude that the IFDI is negatively related to OFDI in China. We also find evidence that OFDI is significantly influenced by the entrepreneurial behavior in China—outwards entrepreneurial behavior, “the index of entrepreneurs ’ confidence (EEI) ” is negatively related to OFDI while the inwards entrepreneurial behavior, “the index of business condition (BCI) ” is positively related to OFDI in China