Viewpoint escape FDI from emerging markets: clarifying and extending the concept

Purpose The purpose of this paper is to examine the concepts of escape FDI and institutional voids using an industry study within a large emerging market (China). The author shows how regulatory and structural weaknesses in the Chinese dairy sector may prompt “escape” investment and how outsider firms might use such a strategy to regain competitiveness. Design/methodology/approach The paper develops and refines an important international business concept which has received very little research attention, within the setting of an industry study. Findings The concept of escape FDI is critiqued and extended to consider cases where discrimination occurs and industry restructuring triggers escape FDI. Research limitations/implications The discussion is based on a single industry and home country. Further work to develop and test these ideas in a broader context is needed. Practical implications The author identifies the conditions most likely to trigger escape FDI as well as firm and home country characteristics favouring such a strategy. Originality/value The author extends the concept of escape FDI in the context of government-driven structural reform and political discrimination creating favoured “insider” firms and disadvantaged “outsiders”.