Information Costs and Location of FDIs within the Host Country: Empirical Evidence from Italy
- PDF / 722,572 Bytes
- 27 Pages / 445.2 x 768.6 pts Page_size
- 66 Downloads / 163 Views
Abstract.Theliteratureon foreigndirectinvestments (FDIs)has analysed the location strategies of multinationalenterprisesacross national borders,but therehavebeenfew studiesof locationdecisionsby foreign investorswithinthe bordersof a singlecountry.Thepaperarguesthatthe drivingfactors of these location choices have differinginfluenceson indigenousand foreign investors.Specifically,foreigninvestorssuffer froma conditionof adverseasymmetryin informationcosts comparedto insiders. Thus, foreign investors'decisions on the location of their activitieswithina host countrymainlyreflecta rationalresponseto the existenceof informationcosts. In this paper,a cross-regionmultipleregressionmodelis developed,with referenceto a databasecontainingdetailedinformationon cross-border takeovers involvingItalian industrialfirms in the period 1986-91. Empiricalevidencesupportsthe hypothesisthat the spatialdistribution of inward FDIs is mainly governedby informationcosts. Finally, implicationsfor futureresearchare discussed. INTRODUCTION The literatureon foreign direct investments(FDIs) and the international growthof firmshas proposedvariousmodelsto explainthe locationchoicesof multinationalenterprisesthat go abroadeitherthroughacquisitionsof established foreignfirms or throughgreenfieldinvestments.The "eclectictheory" [Dunning 1980, 1993]highlightsthe role locationalfactors play both as FDI pull factors(regardingthe countryof destination)and push factors(regarding the country of origin) in decisions of companies to expand beyond their *Sergio Mariotti is Full Professor of Industrial Economics at Politecnico di Milano, Milan, Italy. His primary research interests are in economics of innovation, technical change and theory of multinational enterprise, inter-firm agreements and evolution of transaction governance. **Lucia Piscitello is a Doctoral Student in Management Engineering at the University of Padua. She also works as a Research Fellow at Politecnico di Milano mainly on internationalisation of the firm and multinational enterprise. An earlier draft of this paper was presented at the 20th EIBA Annual Conference, Warsaw, December 11-13, 1994. The financial support of a CNR grant (contract no. 91.02181.CT11) is gratefully acknowledged. The authors wish to thank Luigi Buzzacchi, Massimo G. Colombo, Rocco Mosconi, and three anonymous referees for their constructive comments. The usual disclaimer applies. The paper is a joint effort by the authors. Sergio Mariotti drafted the second, fourth and sixth sections, and Lucia Piscitello, the first, third and fifth sections. Received: December 1993; Revised: November 1994 & March 1995; Accepted: April 1995.
815
Palgrave Macmillan Journals is collaborating with JSTOR to digitize, preserve, and extend access to Journal of International Business Studies ® www.jstor.org
816
JOURNAL OF INTERNATIONALBUSINESS STUDIES, FOURTH QUARTER 1995
national borders.At the same time, empiricalstudies have focused on crosscountryanalysesin an effortto supporttheoreticalmodelsof growthstrategies of multinational
Data Loading...
