Market- and resource-seeking motives in location choices: evidence from Chinese service firms

Abstract

Purpose This study examines how market-seeking and resource-seeking motives influence the foreign location choices of service firms from an emerging economy. It further investigates how host-country digital economy development and institutional quality condition these relationships. Design/methodology/approach Using a firm-country-year panel dataset of 14,217 outward investment observations involving 1,036 Chinese listed service firms across 55 host countries during 2000–2023, this study employs negative binomial regression models to examine how market potential and human capital shape firms’ foreign entry decisions. Moderating effects are tested through interaction models, with robustness checks including alternative variable specifications, lagged models, and zero-inflated negative binomial estimation. Findings The results show that both market potential and human capital significantly increase foreign entry, with human capital exerting a stronger effect. Host-country digital economy development strengthens the effects of both market-seeking and resource-seeking motives by reducing transaction costs and facilitating cross-border service delivery. Institutional quality directly promotes foreign entry but weakens the positive effect of human capital, suggesting that highly regulated institutional environments may reduce the attractiveness of strategic resource acquisition. Heterogeneity analysis further indicates that non-state-owned enterprises are more responsive to market potential, whereas state-owned enterprises place greater emphasis on human capital acquisition. Originality/value This study extends springboard theory into the service-sector context by integrating internationalization motives with host-country digital and institutional environments. It also contributes to the international business literature by providing service-oriented evidence on how emerging-market firms navigate heterogeneous external environments in the digital economy era.

The authors' abstract, as published at the source. International Journal of Emerging Markets, 2026 · DOI ↗