This doctoral thesis focuses on the creative expansion of the soft power (SP) concept. This is done by cross-fertilizing power concepts and theories from International Relations, International Political Economy, International Business, and Behavioral Economics. This way, Nye’s taxonomy on SP (2011), Lukes’ (1974) three faces of power along with Foucault’s understanding of power (Foucault, 1977; in Hay, 2002), Barnett and Duvall’s taxonomy on power (2005), Strange’s (1988) dimensions of structural power, and the nudge theory (Thaler & Sunstein, 2021) extend the SP concept to different dimensions. Such expanded framework provides a nuanced SP understanding and an analytical SP tool. By applying this framework, this thesis explores the SP dimensions of Chinese outward foreign direct investments (COFDI) in the EU. Thus, deeper understanding of COFDI SP is attained, and through this research problem, the SP framework is further reinforced. Four SP dimensions of COFDI are studied: 1) passive influence or perceptions; (2) active indirect influence or institutional power based on agenda-setting; (3) capability to create direct effects on the target or structural power; and (4) possibilities for co-occurring SP effects based on the critical SP strand. The four research questions are empirically addressed through a mix of methodologies suited to data availability. The main conclusions are: (1) COFDI is among the least important, and the US view of China is the most important factor shaping China’s SP; (2) COFDI agenda-setting capacity is driven by economic cooperation but hampered by counteracting nudges. Such nudges are related to the EU-US bond regarding their similarities of values, political systems, and security concerns; (3) COFDIs’ structural capability to provide direct effects (especially the Belt and Road Initiative) across EU countries confirms the attractive financial alternative for the EU’s less economically and democratically developed members, and its important qualitative but negligible quantitative power; and (4) the critical view discovered that COFDI has significant effect on China’s innovation that can potentially improve China’s image.
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