This study examines the impact of policy risk differences on outward foreign direct investment (OFDI) of emerging economies’ multinational enterprises (MNEs) based on organisational learning theory. A framework analyses the relationship between policy risk differences and OFDI, and the moderating effects of institutional quality and economic dependence. Using China’s OFDI data from 2009 to 2021, empirical results show policy risk differences negatively impact Chinese enterprises’ OFDI, while institutional quality and economic dependence weaken this effect. Heterogeneity analysis indicates the negative impact is significant in more developed hosts, with insufficient political relations and less Chinese aid. Findings suggest Chinese multinationals are risk-averse, preferring hosts with smaller policy risk differences, considering the institution, development and bilateral political-economic exchanges in location decisions.
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