Location choice of foreign direct investment in technical KIBS in China: impact of human capital and intellectual property rights protection

Abstract

Purpose: This study considers the “technology creation” characteristic of technical knowledge-intensive business services (T-KIBS) and examines how human capital and intellectual property rights (IPR) protection affect the location choice of foreign direct investment (FDI) in China for two types of T-KIBS: (1) information transmission, software and information technology (ICT) services and (2) scientific research and technology (SCI) services. Design/methodology/approach: Our empirical analysis is based on panel data on 22 Chinese provinces from 2009 to 2017. We use the generalized method of moments estimation for the regression analysis. Findings: FDI in ICT services prefers regions with high human capital, while FDI in SCI services favors regions with good IPR protection. Research limitations/implications: Future research could use more comprehensive data and qualitative interviews to enhance the findings. Practical implications: These findings provide a foundation for China’s future policy on attracting FDI into T-KIBS, especially in areas related to human capital and IPR protection. Originality/value: This study bridges the research gap on the FDI location choice of T-KIBS in China by clarifying the influences of human capital and IPR protection and providing theoretical support for the location choice of T-KIBS FDI.