Corruption and market attractiveness influences on different types of FDI |
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| Authors: | Lance Eliot Brouthers Yan Gao Jason Patrick McNicol |
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| Affiliation: | College of Business Administration, University of Texas at El Paso, El Paso, Texas, U.S.A. |
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| Abstract: | Previous studies have proposed that a compensatory model predicts the level of foreign direct investment (FDI) in a country; FDI levels are a result of ‘trade‐offs’ between the positive effect of market attractiveness and the negative influence of corruption. In contrast, we hypothesize and find that the compensatory relationship only holds for market‐seeking investment; for resource‐seeking FDI the model appears to be noncompensatory. Greater market attractiveness mitigates the negative impact of corruption on market‐seeking investment, but the ability of market attractiveness to mitigate the negative impact of corruption on resource‐seeking FDI quickly disappears as corruption levels increase. Implications and future research directions are discussed. Copyright © 2008 John Wiley & Sons, Ltd. |
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| Keywords: | corruption market attractiveness foreign direct investment market‐seeking resource‐seeking labor‐seeking |
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