The impact of internet use on multinational enterprises' OFDI: evidence from China

Based on the combination of China's large outbound investment transaction data from 2005 to 2020 in the China Global Investment Tracker database and enterprises' basic information, this study analyzes the influence of Internet use by multinational enterprises (MNEs) on their outward foreign direct investment (OFDI). The results show that the improvement in MNEs' Internet use has significantly promoted the development of their OFDI, but the WeChat use index, which mainly serves the domestic market, has a crowding-out effect on this process. Heterogeneity analysis shows that the promoting effect of Internet use on OFDI mainly occurs in "the non-Belt and Road" and developing countries, midwestern regions, cross-border M&A and service investment. Further analysis shows that the impact of Internet use on OFDI is mainly generated through two channels: easing financing constraints and improving technological innovation ability.