Country risk and investment efficiency in China’s overseas expansion: the buffering effect of digital transformation

With the increasing complexity of globalization, the constraints imposed by host country risk on the efficiency of Chinese multinational enterprises’ (MNEs) outward investment have become increasingly prominent. Using outward direct investment (ODI) data of Chinese listed companies between 2005 and 2022, this study constructs a three-dimensional unbalanced panel dataset to examine the impact of country risk on corporate ODI efficiency from a micro-level perspective, along with its underlying mechanisms. The results show that country risk significantly hinders the efficiency of enterprises’ ODI. However, enterprise digitalization can alleviate these adverse effects by enhancing information integration and resource allocation, thereby reducing risk transmission. Mechanism tests further reveal that political stability, economic freedom, and exchange rate volatility in host countries are the core channels through which country risk affects investment efficiency. Additionally, state-owned enterprises, non-manufacturing firms, and greenfield investment projects exhibit higher sensitivity to country risk. This study provides micro-level evidence for optimizing overseas investment strategies and risk management, while underscoring the strategic importance of digital transformation in mitigating country risk.