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Emerging Economy MNEs: How does home country munificence matter?
Institution:1. Department of Management, London School of Economics, UK;2. Ivey Business School, Western University, Canada;3. Goldsmiths College, University of London, Centre for Economic Performance, LSE, UK;1. Department of Management, London School of Economics, UK;2. Ivey Business School, Western University, Canada;3. Goldsmiths College, University of London, Centre for Economic Performance, LSE, UK;1. IBM Research Ireland, Ireland;2. University of Waterloo, Canada;3. University of Pisa, Italy;4. University of Modena and Reggio Emilia, Italy;1. North Carolina A&T State University, Department of Management, Merrick Hall 333, Greensboro, NC 27411, United States;2. Florida International University, Department of Management & International Business, 1120 SW 8th St, Miami, FL, 33199 United States;3. Erasmus University, Rotterdam School of Management, Department of Strategic Management and Entrepreneurship, Mandevill Building T07-15, Burgemeester Oudlaan 50, 3062 PA Rotterdam, The Netherlands;1. WU Vienna, Welthandelsplatz 1, 1020 Vienna, Austria;2. Department of Management and International Business, College of Business, Florida International University, Miami, FL 33199, United States;3. Department of Strategy, Innnovation, and Entrepreneurship KU Leuven Warmoesberg 26 1000 Brussels, Belgium;1. Gordon Institute of Business Science, University of Pretoria, 25 Fricker Road, Illovo, Johannesburg, 2146, South Africa;2. University of Sussex, Jubilee Building, Falmer, Brighton, BN1 9RH, UK;3. Graduate School of Business, University of Cape Town, 8 Portswood Road, V&A Waterfront, Cape Town, 8002, South Africa;1. University of Sheffield, UK;2. Covenant University, Nigeria;3. University of Surrey, UK;4. IZA - Institute of Labor Economics, Germany
Abstract:Multinational Enterprises (MNEs) from emerging economies (EEs) are establishing operations in advanced economies (AEs), apparently departing from traditional models of internationalization. We explore an under-explored difference between EE MNE and their AE counterparts concerning their country of origin: EEs have less munificent business environments. This leads EE MNEs to make different location choices than AE MNEs when entering AEs, specifically because they are more deterred by barriers to entry. We therefore predict EE MNEs to be relatively more deterred by distance and weak intellectual property protection and relatively more attracted by diaspora of migrants and by markets. Our empirical results are consistent with these predictions.
Keywords:Foreign direct investment  Location choice  Emerging economy multinationals  Home country munificence  Liability of foreignness
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