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RE-EVALUATING THE IMPACT OF INSTITUTIONAL DISTANCE ON THE LOCATION CHOICE AND SUCCESS OF FOREIGN INVESTORS: COMPARING CHINESE AND WESTERN INVESTORS IN AFRICA A thesis submitted for the degree of Doctor of Philosophy In INTERNATIONAL BUSINESS by SANNE VAN DER LUGT Bremen, 14 September 2018 Supervisors: Prof. Dr. Guido Möllering, Jacobs University Bremen (Germany) Prof. Dr. Adalbert Wilhelm, Jacobs University Bremen (Germany) Prof. Dr. Chibuike U. Uche, Leiden University (Netherlands) Bremen International Graduate School of Social Science I Statutory Declaration (On Authorship of a Dissertation) I, Sanne Van Der Lugt, hereby declare that I have written this PhD thesis independently, unless stated otherwise. I have used only the sources data and support clearly mentioned and described in the text. All of the intellectual property of other authors used in the dissertation text is credited to them. This PhD thesis has not been submitted for conferral of degree elsewhere. I confirm that no rights of third parties will be infringed by the publication of this thesis Bremen, September 14th, 2018 ____________________________________ Sanne van der Lugt Dedication I dedicate this dissertation to my wise, energetic and caring daughter Aya. © 2018 Sanne van der Lugt ALL RIGHTS RESERVED II III Abstract This dissertation describes a mixed methods research project seeking to add to our understanding how the internationalization process of Chinese firms relates to the internationalization process of Western firms. The focus of this project was on the assumed competitive advantage for Chinese firms in relatively high-risk host countries. In the first and quantitative part of my study I use a conceptual framework presented by Child and Marinova (2014) to study the role of institutional distance for the location choice of Chinese and U.S. firms. I ran an analysis on the determinants of FDI from Chinese and U.S. firms in a group of African destination countries for the period 2003- 2011. Contrary to popular believe, I found that Chinese investments are not directed to countries with a low level of IM and investments from both China and the U.S. are directed to countries with a low level of political stability. The finding that U.S. investments are – and Chinese investments are not – significantly directed to institutionally mature countries, is explained by Chen, Dollar and Tang (2016) as evidence for an indifferent attitude of Chinese investors towards a weak rule of law. However, I find the evidence for this statement too weak. Therefore, I decided to use process tracing to study the causal mechanism that could explain how the levels of political stability and institutional maturity in China could give Chinese firms an advantage in high-risk emerging markets far away from China. I looked at the case of Chinese telecom vendors in Nigeria to study in detail if and how the levels of political stability and institutional maturity in China impact the challenges and advantages for Huawei and ZTE in Nigeria. The combination of the two studies confirms that financial support via the China Exim Bank does play a role in the location choice of Chinese investors in Africa; however, it also shows that the success of Chinese firms in challenging host markets depends on much more than push factors only. "We don't see things as they are, we see them as we are" (Anaïs Nin, 1961). IV V Acknowledgements Conducting a PhD study as a single mother of a 2-year old in a foreign country was not the easiest road to take. Therefore, I am grateful for the persons who supported me along the road and made this journey insightful, valuable and actually do-able. My heartfelt gratitude goes to my supervisors Prof. Dr. Guido Möllering and Prof. Dr. Adalbert Wilhelm. I thank Prof. Dr. Möllering for his trust in my project from the start, for his encouraging words and for having the patience to go with me through the process that I had to go through in order to get where I am now. Your appreciative feedback and pointed questions were crucial and invaluable to the process of conducting my research and writing this thesis. I thank Prof. Dr. Wilhelm who was willing to jump in when statistics became an important part of my research. Thank you for asking the right questions, letting me enjoy statistics and for setting me on the right track so that I could conduct the analyses myself. I have been very lucky with Prof. Dr. Chibuike Uche as my external supervisor. Prof. Dr. Uche joined my committee at a challenging time for me and showed me that he had my back from day one. His expertise on foreign investment in Africa, the Nigerian business context and his sharp analysis brought more dept to my research. This journey started with Prof. Dr. Scarlett Cornelissen at Stellenbosch University (SUN) who gave me the opportunity to become a full-time researcher at the Centre for Chinese Studies at SUN during my MA study. I am deeply grateful for the freedom and the trust Prof. Dr. Cornelissen gave me to conduct large scale research projects in various African countries. These experiences in the field were my source of inspiration for this study. I am grateful to Prof. Dr. Möllering and Prof. Dr. Christoph Lattemann who enabled me to materialize my ideas into a PhD project. I thank Prof. Dr. Lattemann for his involvement in the initial stage of my research project, for introducing me to his network and for challenging me to get the best out of me. When I wrote that I conducted the statistical analyses myself, I meant with the great support of Dr. Georgi Dragolov who helped me working with the latest version of SPSS and my friend Stijn Depla who helped me with the complicated formula for the bubble graphs. I am also grateful for the honest feedback, good suggestions and valuable input I received from Prof. Dr. Marco Sanfilippo who also kept me in the loop about opportunities for publication and interesting conferences. I am grateful to Prof. Dr. Svetla Marinova who was willing to discuss her article with me during an insightful Skype session. I do hope that this dissertation echoes the immense respect I have for the work of both Prof. Dr. Marinova and Prof. Dr. Child. My sincere thanks also go to Prof. Dr. Derek Beach who taught me how to use process tracing during a course at Aarhus University and who was willing to review the part of my Methods Chapter in which I explain process tracing. My heartfelt gratitude goes to Prof. Dr. Margrit Schreier who was like a mentor to me. She was the perfect sparring buddy on issues directly related to my research as well as on more personal issues. These conversations kept me sane. Without Prof. Dr. Wang Duanyong this research would have been impossible. I cannot thank him enough for his support for my field trip to Nigeria. Prof. Wang actually flew to Nigeria – and made sure that his airplane would land before mine – to stay by my side during the whole field trip because of the reputation of the country. He brought me in contact with senior managers of ZTE and Huawei and translated during the interviews in Chinese. I would also like to thank my friend Tom who provided me with up-to-date information on the security issues in Lagos and Abuja and Chigozie who was the perfect guide in Lagos. I am also deeply grateful for the trust I received from individuals within the management of Ericsson, Huawei and ZTE who were willing to contribute to this research. Furthermore, I am grateful for the support Mr. Westerhuis from the Netherlands Ministry of Foreign Affairs and Mr. Buitelaar from Smile who all generously shared their time and network with me. Special thanks go to the Chinese Globalization Association and Prof. Dr. William Hua Wang from the Kedge Business School who financed and co-organized a workshop with me in Shanghai on Chinese outward investments. The results from this workshop inspired my field research in Nigeria. I would also like to thank Chan Yann who helped me as a student assistant to transcribe and translate the Chinese interviews. My heartfelt gratitude goes to Babah Tarawally, Meindert Wolters and Sander Staps for proofreading my dissertation before printing. Thank you all for making time for me. I am also grateful to all the persons whom I met at conferences, who reviewed my papers and asked critical questions after my presentations. The stronger the criticism the more encouraged I felt to do and explain better. No shine without friction. Thank you for giving me the opportunity to shine brighter. Conducting a PhD study stands or falls by the presence of a supportive community. I am very grateful that Prof. Dr. Möllering and Prof. Dr. Lattemann introduced me to the Bremen International Graduate School for Social Sciences with its warm and supportive atmosphere. My cohort felt like family, my office mates became friends for life and colloquia were like a party that I did not want to miss (thanks to all the homemade food). In this regard I would especially like to thank our Field Coordinator Dr. Franziska Deutsch for her straightforward feedback, unlimited support and medicinal chocolate croissants (that she always brought exactly when they were most needed). VI VII To my beloved office mates and friends for life Dora, Kwaku, Marufa, Nadine and Nazan: you made PhD-life so much fun! You were the best support team I could have wished for. I would also like to thank Marcel for encouraging me to reach for the top, both during our climbing evenings and in my career.

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