Back to roots: TMTs’ country-specific experience,FDI preference,and political center favoritism |
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| Institution: | 1. Huazhong University of Science and Technology, School of Management, 1037 Luoyu Road, Wuhan 430074, PR China;2. Shanghai University, SILC Business School, 99 ShangDa Road, BaoShan Dirstrt, Shanghai 200444, PR China;3. University of Technology Sydney, UTS Business School, 15 Broadway Ultimo, 2007, NSW, Australia;1. Graduate School of Future Strategy, KAIST, Daejeon 34141, Republic of Korea;2. Ministry of SMEs & Start-ups, Sejong 30121, Republic of Korea;1. University of Southern Denmark, Campusvej 55, 5230 Odense, Denmark;2. Otto von Guericke University Magdeburg, Universitätsplatz 2, 39106 Magdeburg, Germany;3. University of North Carolina at Greensboro, 516 Stirling Street, Greensboro, NC 27402, USA;4. University of Ariel, Ramat Hagolan St. 65, Ariel 40700, Israel;5. University of Agder, Gimlemoen 19, 9i 241, 4604 Kristiansand, Norway;6. Goa Institute of Management Poriem, Sattari, Goa 403505, India;1. The University of Akron College of Business Akron, OH 44325, USA;2. Department of Comparative and International Business, Alliance Manchester Business School, The University of Manchester, Booth Street West, Manchester M15 6PB, UK;3. Rutgers Business School, Newark and New Brunswick 1 Washington Park, Room 1098, Newark, NJ 07102, USA;4. School of Business, Rutgers University, 227 Penn Street, Camden, NJ 08102–1656, USA |
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| Abstract: | This paper investigates how the origin experience and work experience of top management teams (TMTs) affect foreign direct investment (FDI) decisions of multinational enterprises (MNEs), drawing on learning theories and social capital view. Using data from Standard and Poor’s firms operating in China during 2014–2016, we find that TMTs’ country-specific origin experience and work experience have a positive impact on the extent of FDI in the focal country, while we find that the former has a greater impact. Consistent with the consideration of being deeply anchored in the specific country, we find that TMTs with origin experience, relative to work experience, are more likely to choose FDI locations in the political center. We further find that the effect of origin experience on the extent of FDI and the preference for political centers will be more pronounced for MNEs with low levels of profitability. This study contributes to the literature on international business and provides practical implications for international expansion. |
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| Keywords: | Top management team Country-specific experience Origin experience Work experience Multinational enterprise Foreign direct investment |
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