Explaining variability in the investment location choices of MNEs: An exploration of country,industry and firm effects |
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Authors: | Simona Rasciute Paul Downward |
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Institution: | 1. Loughborough University, Loughborough, Leicestershire, LE11 3TU, UK;2. School of Sports, Exercise and Health Sciences, Loughborough University, Loughborough, Leicestershire, LE11 3TU, UK |
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Abstract: | This paper examines the variation in foreign direct investment (FDI) location decisions of European multinational enterprises (MNEs.) An innovative empirical approach is applied to a new data set which contains over 15,000 individual FDI location decisions in 25 European countries over a 17-year period and combines country-, industry- and firm-level factors. The empirical results show that the responsiveness of FDI location choices to country-level factors is heterogeneous both across sectors and across firms of different characteristics as well as unobserved factors. For example, the results show that the importance of market size increases with investing firm’s size and skill intensity, while proximity between countries, as well as cultural and linguistic ties are more important for smaller firms. |
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Keywords: | Logistic regression Heterogeneity Dunning’s OLI paradigm European union Foreign direct investment |
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