Ethnic ties, location choice, and firm performance in foreign direct investment: A study of Taiwanese business groups FDI in China

This paper examines ethnic ties and their impact on FDI location choice and firm performance. Drawing on social network theory and using data from 88 Taiwanese business groups, the study tests the impact of ethnic ties on firm FDI location choice and performance outcomes in China. Results show that ethnic ties of top managers matter in facilitating firm FDI location choice. In contrast to our expectations however, ethnic ties do not help to improve firm performance in China. Implications of these results are discussed in view of existing literature and future research opportunities are delineated.

► We examines ethnic ties and their impact on FDI location choice and firm performance.
► We draw on social network theory and use data from 88 Taiwanese business groups.
► Results show that ethnic ties of top managers matter in facilitating firm FDI location choice.
► However, ethnic ties do not help to improve firm performance in China.