The Impact of Capital Investment on The Internationalization of Chinese Firms - Moderating Effect of Covid-19 Pandemic

This paper investigates whether an increase in capital investment by Chinese firms affects their level of internationalization. And COVID-19 is used as a moderating variable to investigate whether the effect of capital expenditure on the internationalization level of Chinese firms changes. This paper uses the panel data of 630 manufacturing listed companies in China from 2012-2021, and adopts the theory of economies of scale and black swan theory. And this paper applies econometric methods for empirical analysis, using least squares (OLS), random effects and fixed effects regression models. Robustness tests were also conducted. Our results show that (1) firms with high capital expenditures are more capable of internationalization than those with low capital expenditures, and this result verifies the applicability of the economy of scale theory; (2) the positive effect of capital expenditures on firm internationalization is significantly smaller after using COVID-19 as a moderating variable, and this result verifies the applicability of the black swan theory.