Exploring the Drivers of Chinese FDI in Latin America: An RBV and Institutional Theory Analysis. A Study of the Mining, Energy, and Technology Sectors

Fabio Foschiano

Studenteropgave: Kandidatafhandlinger

Abstract

This thesis provides a comprehensive analysis of the Resource-Based View (RBV) and Institutional Theory to explain Chinese investments in Latin America. The study aims to identify the motivations, strategies, and challenges associated with China's growing presence in the region.
The RBV explains that China invests in resource-rich Latin American countries to secure reliable and affordable supplies of commodities, minerals, and oil, essential for economic growth and industrial development. Chinese firms also invest in the region to gain a competitive advantage over their rivals from other countries, particularly the US, which is still the main investor in the region.
Institutional Theory, on the other hand, highlights the role of cultural, social, and political norms in shaping investment decisions. The theory suggests that China's investments in Latin America reflect its efforts to build relationships with key actors in the region, such as governments, business leaders, and local communities. Additionally, China's investments are influenced by the political and regulatory environment of the region, which can either facilitate or hinder investment activities. The success of Chinese investments in Latin America depends on how well China can navigate the institutional environment of the region, which is characterised by a complex set of regulations, norms, and power dynamics.
The study also identifies that Chinese firms' ownership advantages are mostly either network-based or home country-based. However, Chinese firms must learn to navigate local cultures and customs, build relationships with key stakeholders, and adapt their business strategies to fit the local context. Additionally, they must also be aware of the risks associated with investing in politically unstable and economically volatile regions, which can have a negative impact on their investments.
Overall, this research sheds light on the dynamics of Chinese investments in Latin America and contributes to a broader understanding of the intersection between economic and institutional factors in international business. The insights of the RBV and Institutional Theory provide a nuanced and comprehensive analysis of the motivations, strategies, and challenges associated with China's growing presence in Latin America. However, other perspectives, such as Transaction Cost theory, the Eclectic paradigm (OLI), and the Linkage, Leverage, and Learning (LLL) framework, could provide further analysis and complement the findings of this study.
As China continues to expand its global reach, it is important to understand the drivers of its investments and the implications for the countries and regions involved. This thesis makes a significant contribution to this important area of research and highlights the need for further investigation into the complex interplay between economic and institutional factors in international business.

UddannelserCand.merc.Business, Language and Culture - Business and Development Studies, (Kandidatuddannelse) Afsluttende afhandling
SprogEngelsk
Udgivelsesdato2023
Antal sider75
VejledereJacobo Ramirez