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http://ssrn.com/abstract=1099057
 
 

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Does Ethnicity Pay? Evidence from Overseas Chinese FDI in China


Yasheng Huang


Massachusetts Institute of Technology (MIT) - Sloan School of Management

Li Jin


Harvard Business School - Finance Unit

Yi Qian


Northwestern University - Kellogg School of Management

February 14, 2008

MIT Sloan Research Paper No. 4690-08

Abstract:     
Using a comprehensive sample of all FDI firms in China, we explore the question whether ethnicity enhances operating performance. While there has been a sizable theoretical literature studying ethnicity and foreign investments, the prediction of the impact of ethnicity on firm profitability is far from clear. We demonstrate empirically that ethnic firms do not command an operational advantage over non-ethnic firms in the overall sample. Further tests suggest that while ethnic firms command an operational advantage over nonethnic firms initially, such advantage declines over time. We then explore what might have caused the decline of the ethnic advantage, and our results suggest that lack of investment in intangible and human capital by ethnic firms is driving the pattern we observe. Overall, our results suggest that ethnicity does not pay or that ethnicity does not confer a permanent operating advantage on a firm.

Number of Pages in PDF File: 52

Keywords: China, FDI, ethnicity

JEL Classification: G30, F23, P20

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Date posted: February 27, 2008 ; Last revised: February 13, 2013

Suggested Citation

Huang, Yasheng and Jin, Li and Qian, Yi, Does Ethnicity Pay? Evidence from Overseas Chinese FDI in China (February 14, 2008). MIT Sloan Research Paper No. 4690-08. Available at SSRN: http://ssrn.com/abstract=1099057 or http://dx.doi.org/10.2139/ssrn.1099057

Contact Information

Yasheng Huang (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
Li Jin
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-5590 (Phone)
617-496-5271 (Fax)
Yi Qian
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
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