Using a combined PLS path and MCDM approach in determining the effectiveness of Taiwan's outward FDI policy

Authors:
Yi-Hui Chiang;Chih-Young Chih-Young
Affiliations:
Institute of Management of Technology, National Chiao Tung University, Hsinchu, Taiwan and Department of International Trade, Ta-Hwa Institute of Technology, Hsnchu, Taiwan;Institute of Management of Technology, National Chiao Tung University, Hsinchu, Taiwan
Venue:
WSEAS Transactions on Information Science and Applications
Year:
2009

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Abstract

Various studies have looked at outward foreign direct investment (FDI) from the host country perspective but have paid little attention to parent country determinants. Does the outward FDI policy (investment upper limit regulation) matter? In this paper, we propose a combined partial least squares (PLS) path model and multiple criteria decision-making (MCDM) approach to study Taiwan's outward FDI to China. The main purpose of this study is to investigate the determinants of Taiwanese firms' decisions in making FDI into China. Using data from Taiwanese optoelectronics firms doing business in Taiwan between 1998 and 2007), the results of the proposed model show that the outward FDI policy of the parent country is a key factor in Taiwan's outward FDI into China. It is also found that the macroeconomic environment of the host country was a stronger determinant than the parent country on Taiwan's outward FDI into China.