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The purpose of this paper is to analyze how path dependence in the evolution of major theories of foreign direct investment (FDI) locked in a theoretical perspective of the multinational enterprise that focused on asset-exploitation. This perspective is challenged by recent contradicting observations of multinationals from China and other emerging economies. A decisive re-orientation of FDI theory is proposed as a way forward to resolve this tension.

Placing FDI theories into the context of FDI patterns prevailing at the time they were developed, Thomas Kuhn’s framework on the evolution of scientific knowledge is employed to track how the mainstream FDI theory emerged, went through a period of normal science and then approached a crisis of science in this field.

The evolution of FDI theory is strongly path-dependent, which made it difficult for theory to effectively incorporate new conceptual discoveries and empirical findings about the nature of FDI activity.

FDI theory would benefit from a full re-orientation to a demand-oriented perspective which places the pursuit of advantages, assets, resources, etc., at the core of the theory. Such a change is implicit in many recent theoretical advances and would assure theory is generalizable to all types of FDI.

Since the beginning of the 21st century, China’s outward foreign direct investment (OFDI) is growing steadily and Chinese multinationals (MNCs) are playing an increasingly important role in the global economy. Thus, the number of papers focusing on China’s OFDI and Chinese MNCs has been increasing during the last years. The aim of this chapter is to carry out a review of the empirical papers dealing with Chinese MNCs published between 2002 and 2012 in high-impact international business and management journals.

This chapter reviews 43 empirical papers focusing on Chinese MNCs that were published in nine major scholarly journals between 2002 and 2012.

We report individual and institutional contributions, the theories and methods used, the research topics, and the main findings. We also discuss implications for future research.

Some previous literature reviews have dealt with research on China’s OFDI and Chinese MNCs. Nevertheless, none of the earlier reviews dealt specifically with empirical papers; neither did they provide an analysis of both individual and institutional contributions.