Extending Dunning’s Paradigm: The Role of Host Country Global Value Chain Position in Chinese Experimental Outward Foreign Direct Investment Location Choices

This study extends Dunning’s location paradigm by incorporating the host country’s global value chain (GVC) position as a distinct motivation for outward foreign direct investment (OFDI). We empirically disentangle this GVC-seeking motive from strategic asset-seeking using horserace tests. Analyzing 320 Chinese OFDI events across 31 OECD countries (2005–2014), we find that higher GVC positions (GVCPs) significantly attract investment, validating our theoretical extension. Conversely, labour-seeking OFDI targets lower GVCPs, an effect moderated by host country development. Firm heterogeneity analysis reveals that the GVC-seeking effect is stronger for non-state-owned, large and technology-intensive firms. Validating with 2015–2023 data, we confirm the positive GVCP influence, though it is marginal in non-US samples and overshadowed by US geopolitical factors. Moreover, OECD GVC hierarchies remain stable (Spearman’s ρ > 0.91, 2014–2023). These findings, extendable to other emerging-market multinationals, enrich GVC and OFDI literature and offer strategic insights for China’s economic transformation.