Spatial mediation and moderated effect on FDI performance: Empirical study of Taiwanese firms in China (1999–2008)

Taiwanese businesses exhibit a specific pattern when they enter into an uncertain territory, and tend to start off with a small amount of investments and explore markets by improvising strategies and tactics. This paper integrates theories concerning transaction costs and systems, and develops antecedent causes, and intervening and interference factors, by referring to the perspectives of economic geography. It is found that when faced with high uncertainties in emerging markets, multi-national corporations are highly concerned about institutional environments. Labor cost of different regions is an implicit indicator of the average wages that local companies are willing to pay. Companies that are willing to pay a high labor cost are less likely to face labor shortage, thus ensuring normal operation and better performance.