Gambling preferences and enterprises internationalization performance: Evidence from China

This paper examines the role of regional attitudes towards gambling on enterprise internationalization performance. Using the unique data of lottery sale as a proxy for local gambling preference, combining the data of Chinese listed companies in Shanghai and Shenzhen from 2010 to 2019, we find that firms headquartered in gambling-prone areas are more likely to have better internationalization performance. This result is valid after undertaking a series of robust tests and addressing endogeneity. Furthermore, we identify three channels through which gambling preferences intensify enterprises internationalization performance: spillover effect, market expansion effect and innovation incentives effect. Finally, the incentive effect is more pronounced in firms with more serious financial constraints, worse corporate governance, located in worse economic performance regions and those non-state-owned enterprises. We suggest that regional preferences toward gambling play an important role in enterprises internationalization, and present new insight to improve international market competitiveness for emerging economies.