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Foreign Location Choice: Review and Extensions

Published on Apr 1, 2016in International Journal of Management Reviews 6.49
· DOI :10.1111/ijmr.12064
Jin Uk Kim4
Estimated H-index: 4
(University of Illinois at Urbana–Champaign),
Ruth V. Aguilera34
Estimated H-index: 34
(Ramon Llull University)
Abstract
International Business (IB) research on foreign‐location choice has experienced a revival in recent years, yet a comprehensive review has been sorely lacking. The purpose of this review is to synthesize the findings of recently published articles on the topic of foreign‐location choice and offer fruitful directions for future research. This review consists of three sections: first, the authors provide a historical overview of this research stream by tracing its origins and analyzing the general trend that has shaped research on foreign‐location choice. Next, the authors conduct a review of 137 recent articles published in leading IB and business/management journals. These articles are categorized according to common topics, and the main findings of each category are synthesized in order to bring some cohesion to this fragmented field. Lastly, the authors identify issues that remain under‐researched or require re‐thinking some taken‐for‐granted assumptions. Through this effort, they are able to connect the past, present and future of research on foreign‐location choice and to shed some new light on the IB literature.
  • References (245)
  • Citations (37)
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References245
Newest
Published on Dec 14, 2015
Simona Iammarino26
Estimated H-index: 26
,
Philip McCann43
Estimated H-index: 43
This is a very rich book — rich in content and rich as a source of ideas for researchers. It is clearly structured and knit together, carefully and widely researched, argued and developed. The aim of the book is to present an integrated perspective on the following three key elements of the contemporary economic and business world: the firm, specifically the multinational enterprise (MNE); space and geography, specifically localization and regionalism; and knowledge, innovation and technology.
76 Citations Source Cite
Published on May 1, 2015in Global Strategy Journal 2.12
Jin Uk Kim4
Estimated H-index: 4
(University of Illinois at Urbana–Champaign),
Ruth V. Aguilera34
Estimated H-index: 34
(Ramon Llull University)
Firms operate in a semi-globalized world wherein opportunities and constraints arise at both the country and regional levels; however, extant theories of firm internationalization focus mostly on country-level determinants. We aim to overcome this deficiency by developing a theoretical model that explicates the mechanisms driving firm internationalization in a semi-globalized world. Integrating the organizational learning literature with research on semi-globalization, we argue that firms intern...
14 Citations Source Cite
Published on Jul 1, 2014in Journal of World Business 3.99
Andreas P. Petrou7
Estimated H-index: 7
(Cyprus University of Technology),
I.C. Thanos8
Estimated H-index: 8
(University of Glasgow)
This study adopts a resource perspective to explore a non-linear relationship between corruption and two measures of bank foreign market commitment, the capital invested and the share of equity, on a sample of 131 bank entries in forty host countries. Our findings support a U-shaped relationship providing evidence of the “grabbing hand” view at low to moderate levels of corruption and, supporting the “helping hand” view at high levels of it. In addition, market-seeking motives are found to have ...
24 Citations Source Cite
Published on Jun 1, 2014in International Business Review 2.75
Frank L. Bartels4
Estimated H-index: 4
(United Nations Industrial Development Organization),
Francesco Napolitano1
Estimated H-index: 1
(United Nations Industrial Development Organization),
Nicola E. Tissi1
Estimated H-index: 1
(United Nations Industrial Development Organization)
This paper examines the characteristics of Location Specific Factors (LSFs) in Sub-Saharan Africa (SSA) regarding inward Foreign Direct Investment (FDI) by Multinational Enterprises (MNEs). Exploratory Factor Analysis (EFA) of 758 MNEs in 2003, 1216 in 2005 and 2402 in 2010 is used to compare the variability in LSFs in ten, 15 and 19 SSA countries respectively. We find firstly the most powerful factors, influencing the political-economy and trade dynamics of hosts to FDI, stable over time. Secon...
27 Citations Source Cite
Published on Jun 1, 2014in International Business Review 2.75
Jing-Lin Duanmu9
Estimated H-index: 9
(University of Surrey)
Scholars argue that multinational corporations tend to locate their investment in countries with lower labor standards, but empirical results are highly inconsistent. In this paper, we investigate the effect of differential labor standards on the location choice of outward greenfield foreign direct investment (FDI) from Brazil, Russia, India and China (i.e. the BRIC countries). We find robust evidence that while there is a tendency toward the attraction of FDI by lower labor standards in develop...
29 Citations Source Cite
Published on May 1, 2014in Journal of International Business Studies 6.20
Jiangyong Lu19
Estimated H-index: 19
(Peking University),
Xiaohui Liu25
Estimated H-index: 25
(Loughborough University)
+ 1 AuthorsIgor Filatotchev46
Estimated H-index: 46
(Vienna University of Economics and Business)
We examine the extent to which Chinese government support of foreign direct investment (FDI) projects and host country institutional environments interact with prior entry experience by Chinese firms, and how this interrelationship affects FDI undertaken by Chinese firms. We hypothesize that home country government support and well-established host country institutions enhance organizational capabilities to take risks in FDI. As such, they reduce the need to accumulate experiential knowledge and...
130 Citations Source Cite
Published on Apr 1, 2014in Strategic Management Journal 5.48
Elena Kulchina4
Estimated H-index: 4
(Duke University)
Emphasizing the importance of informed location choice, prior strategy research has examined how private information about locations affects foreign direct investment. Publicly available media information has received little attention, however, perhaps because its impact on location choice is expected to be trivial. This study examines the relationship between the extent of a location’s media coverage and the number of entering foreign firms in Russia, using a novel instrumental variable for med...
9 Citations Source Cite
Published on Mar 1, 2014in Administrative Science Quarterly 5.88
Exequiel Hernandez7
Estimated H-index: 7
(University of Pennsylvania)
Using data from a sample of foreign subsidiaries established in the U.S. by firms from 27 countries between 1998 and 2003, this study examines the relationship between immigrants and the foreign expansion of organizations from their home countries. I propose that common country bonds to immigrants can become unique channels of knowledge, providing firms with idiosyncratic benefits in foreign places. Such connections to co-national immigrants should positively influence location choice and surviv...
30 Citations Source Cite
Published on Feb 1, 2014in Academy of Management Journal 6.70
R. Greg Bell10
Estimated H-index: 10
(University of Dallas),
Igor Filatotchev46
Estimated H-index: 46
(Vienna University of Economics and Business),
Ruth V. Aguilera34
Estimated H-index: 34
(University of Illinois at Urbana–Champaign)
This article investigates stock market responses to different constellations of firm-level corporate governance mechanisms by focusing on foreign initial public offerings (IPOs) in the United States. We build on sociology-grounded research on financial market behavior and use a �nested� legitimacy framework to explore US investor perceptions of foreign IPO value. Using a fuzzy set theoretic methodology, we demonstrate how different combinations of monitoring and incentive-based corporate governa...
132 Citations Source Cite
Published on Jan 1, 2014in British Journal of Management 3.06
A. Kolk52
Estimated H-index: 52
(University of Amsterdam),
Johan Paul Lindeque5
Estimated H-index: 5
(University of Amsterdam),
Daniel van den Buuse2
Estimated H-index: 2
(Hogeschool van Amsterdam)
As part of the debate about globalization and regionalization, this paper adds a perspective that has so far remained underexposed, that of (formerly state‐owned) firms in (previously) regulated industries, in order to better understand the (changing) role of the home country/region in internationalization processes in the context of regional market liberalization. We explore the global/regional orientations of the seven major European Union electric utilities from five different home countries,...
13 Citations Source Cite
Cited By37
Newest
Published on Jun 1, 2019in International Business Review 2.75
Edmund R. Thompson16
Estimated H-index: 16
(University of Bath),
Gerard H. Dericks (Oxford Brookes University), Felicia Fai9
Estimated H-index: 9
(University of Bath)
Abstract The lack of valid and reliable measures of firm-level vertical and horizontal internationalization is impeding the development and testing of hypothesized relationships between these respective dimensions of internationalization and a range of important MNE characteristics, actions, and effects. Through a series of qualitative and quantitative studies using data collected from senior MNE executives (total N = 3,146), we develop and validate a scale to measure both vertical and horizonta...
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Published on May 1, 2019in Applied Geography 3.12
Yuyao Ye , Kangmin Wu1
Estimated H-index: 1
(Chinese Academy of Sciences)
+ 3 AuthorsJun Chen
Abstract This study explores how firm heterogeneity affects the geographic agglomeration and location choice of foreign direct investment (FDI) based on micro -evidence from 3558 new foreign manufacturing firms in the Pearl River Delta, China. Kernel density and categorical multivariate linear regression are integrated to examine FDI location choices. The empirical results confirm that firm location choices are jointly influenced by location factors and firm heterogeneity. Specifically, we find ...
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Published on Apr 15, 2019
Chris Wagner (HHL Leipzig Graduate School of Management)
For over four decades the Eclectic Paradigm has experienced a myriad of interdisciplinary advancements and evolved into an ever-broader and complex accumulation of different macro- and micro-level concepts. Despite its persistent validity for research on multinational enterprise activity, subject-related studies have often failed to correlate to previous findings and have independently drawn upon various versions of the Eclectic Paradigm, which exacerbates the comparability of the respective res...
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Published on Apr 1, 2019in International Business Review 2.75
Berrbizne Urzelai1
Estimated H-index: 1
(University of the West of England),
Francisco Puig6
Estimated H-index: 6
(University of Valencia)
One criteria regarding where to invest in foreign markets is linked to the international social capital (ISC) that exists on the place, which enables the access to local knowledge and other location-specific advantages. There are alternative ways to create and make use of that ISC that are still unexplored by International Business literature. In this paper, we study the geographic communities of practice (CoP) that are formed by FDI firms from the same country-of-origin (the so-called country-o...
1 Citations Source Cite
Published on Feb 1, 2019in Management International Review 2.28
Ana M. Romero-Martínez8
Estimated H-index: 8
(Complutense University of Madrid),
Fernando E. García‐Muiña + 1 AuthorsJorma Larimo15
Estimated H-index: 15
(University of Vaasa)
Using secondary data of internationalized Spanish hotel chains, this research attempts to examine the role of formal and informal institutional differences between home and host country from the foreign location choice point of view. Generally speaking, the results show that (a) the higher the formal institutional differences the lower the attractiveness of the foreign location, (b) the negative effect of linguistic differences, as an informal institutional dimension, significantly affects the c...
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Published on Jan 30, 2019in Global Strategy Journal 2.12
Tina C. Ambos15
Estimated H-index: 15
(University of Geneva),
Beate Cesinger6
Estimated H-index: 6
+ 1 AuthorsSascha Kraus23
Estimated H-index: 23
(International Business School, Germany)
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Published on Jan 1, 2019
Paweł Capik3
Estimated H-index: 3
(Keele University),
Magdalena Dej
With the onset of globalisation and ever more progressive liberalisation of international trade and investment regimes, the spatial distribution of firms and economic activities within countries and worldwide is continuously changing. In recent decades, we have often witnessed that what starts as a brave new strategy to ascertain a firm’s competitive advantage soon becomes a global relocation trend, only to evolve again and begin movement in the reverse or yet another direction. Outsourcing and ...
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Michael M. Dowling9
Estimated H-index: 9
,
Dieter Vanwalleghem1
Estimated H-index: 1
We provide a first formal study of target nation selection by Gulf Cooperation Council (GCC) firms in the Persian Gulf seeking to internationalize. We initially show the economic drivers behind target nation selection and then demonstrate the additional influence of a target nation's formal and informal institutions. Effective formal institutions (good governance) and close informal institutions (cultural similarity) in a target nation are preferred. We further examine interactions between forma...
1 Citations Source Cite
Published on Dec 1, 2018in Journal of World Business 3.99
Pallavi Shukla3
Estimated H-index: 3
(Rutgers University),
John Cantwell38
Estimated H-index: 38
(Rutgers University)
We examine how, and to what extent, migrants in a host country attract foreign direct investment (FDI) from firms based in their country of origin (CO). Introducing the notion of institutional affinity, we argue that increased institutional affinity and increased connectedness of institutional environments of migrants’ CO and country of residence, make a location attractive to CO firms. Empirical analysis of FDI and migration panel data shows that in addition to the traditional factors influenci...
3 Citations Source Cite
Published on Nov 1, 2018in Economic Development Quarterly 0.92
Gregory Theyel1
Estimated H-index: 1
(California State University, East Bay),
Kay H. Hofmann3
Estimated H-index: 3
,
Mj Gregory28
Estimated H-index: 28
(University of Cambridge)
How do companies decide where to locate their manufacturing? This study uses insights from manufacturing company executives collected by means of in-depth interviews with 50 manufacturers in the United Kingdom to develop an understanding of manufacturing location decision making. The findings indicate that companies derive competitive advantage from organizing manufacturing in different ways. Retaining or reshoring manufacturing to a company’s home country can enhance new product development, co...
1 Citations Source Cite