Digital Soft Connectivity and MNEs Location Strategies in Emerging Markets: Insights from China

Abstract Book of the 11th International Conference on Research in Management and Economics

Year: 2026

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Digital Soft Connectivity and MNEs Location Strategies in Emerging Markets: Insights from China

Yuxin Wang

ABSTRACT:

As the digital economy reshapes the global investment landscape, the impact of information infrastructure on the location strategies of multinational enterprises remains critical yet under-researched. This study investigates the role of digital soft connectivity in determining MNEs entry with panel data of 283 cities from China. The empirical results show that enhanced city-level information centrality significantly attracts foreign capital by mitigating information asymmetry and reducing search costs. Crucially, the mechanism analysis reveals that digital connectivity exerts a stronger marginal effect in geographically remote and institutionally segmented regions. This indicates that digital networks function as an effective substitute for physical transport infrastructure and can penetrate institutional barriers, which allow firms to overcome traditional location disadvantages. By quantifying the economic cost of the digital divide, this study contributes to the international business literature on how digital infrastructure helps multinational enterprises navigate the liability of foreignness and institutional voids. The findings advocate for a strategic shift in development policy and corporate strategy, emphasizing that integration into global information networks is as vital as physical accessibility for connecting with international capital.

Keywords: Digital Soft Connectivity; Mnes Entry; Liability of Foreignness; Emerging Markets