The Impact of Digital Capabilities on Firms’ Friend-shoring Investments: Based on an Extended OLI Model

Abstract

Abstract: Against the backdrop of intensifying international trade tension, rising technological nationalism and increasing global decoupling risks, how firms should engage in foreign investment becomes a key topic. Building on an extended analysis of the OLI (Ownership, Location, Internalization) model in the context of deglobalization, this study examines the impact of firms’ digital capabilities on their friend-shoring investments (that is, the investments in host countries with friendly bilateral relations to their home countries), and how these effects vary across different industries. Using data from 1,031 A-share listed manufacturing companies in China from 2013 to 2021, the results show that firms’ digital capabilities positively influence friend-shoring investments, while industry uncertainty, competition intensity, and high geopolitical risk industries weaken this effect. This study expands the theoretical implications of the OLI model in the context of deglobalization and provides a new perspective for understanding the relationship between firms’ digital capabilities and friend-shoring investments.

Key words: friend-shoring investment, firms’ digital capabilities, OLI model, industry heterogeneity

Huang Yuanyuan, Zhou Chao, Chen Xuanjin. The Impact of Digital Capabilities on Firms’ Friend-shoring Investments: Based on an Extended OLI Model[J]. Management Review, 2026, 38(4): 15-27.

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