Is OFDI persistence beneficial for firms' performance? Evidence from Chinese firms

Purpose Based on organizational learning theory, this study aims to investigate the performance consequences and potential contextual factors of outward foreign direct investment (OFDI) persistence. Design/methodology/approach A regression analysis was conducted on a sample of 19,950 OFDI events of 1,425 A-share listed Chinese enterprises from 2008 to 2022. The estimator used was ordinary least squares with residual analysis, which allowed us to obtain robust and reliable results. Findings The results indicated that persistence in both greenfield investments and cross-border M&As had a significant and positive impact on firm performance, and such relationship was positively moderated by organizational absorptive capacity. Research limitations/implications This study only tested the economic performance of OFDI persistence rather than innovation and social performance. Exploring the effects of OFDI persistence on other aspects may also add new insights to the persistence literature. Besides absorptive capacity, it might be useful to conduct a more comprehensive consideration of moderators in the future. Originality/value This paper contributes to the research on the temporal dimension of internationalization by introducing the concept of OFDI persistence. Additionally, we used the OFDI spell to capture the notion of OFDI persistence, which is an endeavor to overcome the shortcomings of the traditional indicator. Finally, this paper also contributes to the organizational learning perspective by applying it to analyze persistent OFDI operations.