The Effects of Foreign Direct Investment Colocation: Differences Between Manufacturing and Service Firms |
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| Authors: | Miriam Zschoche |
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| Affiliation: | WHU – Otto Beisheim School of Management, Vallendar, Germany |
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| Abstract: | Colocation may result in positive performance effects because of agglomeration benefits or in negative outcomes because of fiercer competition. Using the notions of industrial organization economics, this study offers a comprehensive industry‐specific analysis on the performance effects of international colocation. We predict that bigger firms will benefit more from colocation of foreign firms in a host country. Considering industry and home country peers, the analysis suggests that positive effects dominate for manufacturing firms whereas service firms are negatively affected. However, these effects are mitigated by a firm's size in a location. A large‐scale empirical analysis on firm‐level data supports the hypotheses. Copyright © 2015 John Wiley & Sons, Ltd. |
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