Introduction P eng and Delios (2006) lament the paucity of re- search on outward foreign direct investment (OFDI) from emerging economy firms. The limited understanding of the phenomenon (Yiu, Lau, & Bruton, 2007) is in sharp contrast to the growing importance of OFDI from emerging economies. As Teagarden (2008) rightfully states, “Transnationals from emerging economies are shaking up industries from high-tech to low-tech, from the southern hemisphere to the north” (p. 2). South Korean firms started international expan- sion 10 to 15 years ahead of Chinese firms, and South Korea has increased its share of OFDI in the world since the early 1980s (see Figure 1). For instance, South Korea’s (hereafter, Korea’s) investment in China has sig- nificantly increased since 1992 with the opening of diplomatic relations between the two countries. More than 50% of the Korean overseas investment projects be- tween 1992 and 1996 were in China (Han, 2002). This in turn has contributed to China’s rapid economic growth as well as its OFDI. 37 This article compares and contrasts the growth of Chinese and Korean multinational enterprises (MNEs). The article identifies the similarities and differences between Chinese and Korean MNEs in terms of motivations for internationalization, expansion strategies, and paths. The goal of this article is to contribute to the literature by shifting focus on host-country conditions to home-country condi- tions in explaining the drivers for firms’ internationalization. We conclude that firms are motivated to expand abroad when faced with domestic competitive disadvantages resulting from absence or de- ficiency of one or more of Porter’s Diamond attributes in their domestic market. Implications for fur- ther studies are also explored. © 2009 Wiley Periodicals, Inc. Internationalization of Chinese and Korean Firms Correspondence to: Xiaohua Yang, School of Management, QUT, 2 George St., Brisbane, QLD 4000, Australia, +61.7.3138.1242 (phone), +61.7.3138.1313 (fax), x3.yang@qut.edu.au. FEATURE ARTICLE By Xiaohua Yang Yong-taek Lim Yuka Sakurai Sun-yea Seo Published online in Wiley InterScience (www.interscience.wiley.com). © 2009 Wiley Periodicals, Inc. • DOI: 10.1002/tie.20243