Do Foreign-Owned and U.S.-Owned Establishments Exhibit the Same Location Pattern in U.S. Manufacturing Industries?
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Do
Establishments Exhibit Pattern
in
U.S.
the
U.S.-Owned Same
Location
Manufacturing Industries? J.MylesShaver* NEW YORK UNIVERSITY
There are arguments to support and contradict the proposition that foreign-owned and U.S.owned establishments exhibit similar location patterns within the United States. This paper addresses these conflicting views by comparing the location of all manufacturing establishments in the United States held by U.S. and by foreign firms. The empirical evidence indicates that the location patterns of foreign-owned and U.S.-owned establishments differ. Moreover, the most influINTRODUCTION L
ocations within the United States
Ivary in their attractiveness for manufacturing investment due to factors that include geography, geology, population, and government policy. Studies such as Papke (1991), Bartik(1985), and
ential factor in explaining the location pattern difference is that foreign-owned establishments, compared to U.S.-owned establishments, favor coastal states. I also find evidence to suggest that foreign firms favor states with low unionization rates, low wage rates, and right to work legislation. These results are consistent with arguments that foreign establishments differ from their domestic counterparts and value location attributes differently. Carlton (1983), assess how a state's attributes enhance or diminish its attractiveness for new manufacturing investment. Many similar studies examine how state characteristics affect foreign firms' new plant locations within the United States. These studies include
*J. Myles Shaver is Associate
Professor of Management and International Business at the Stern School of Business, New York University. His research interests include the management and economics of international expansion, FDI location and performance, and strategy choice under external economies.
I appreciate helpful comments from Jose Campa, Tailin Chi, Wilbur Chung, John Dunning, Kiyohiko Ito, Tom Pugel, Doug Sanford, Bernard Yeung, seminar participants at Rutgers University, seminar participants at the Academy of International Business Meetings in Banff, Canada, and four anonymous referees. I would like to thank Bill Newburry for research assistance and helpful comments. JOURNAL OF INTERNATIONALBUSINESS STUDIES, 29, 3 (THIRDQUARTER1998): 469-492.
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ANDU.S.-OWNED ESTABLISHMENTS LOCATIONPATTERNSOFFOREIGN-OWNED
Head,
Ries
and
Swenson
(1995),
Friedman, Gerlowski and Silberman and (1992), Woodward (1992), Coughlin, Terza and Arromdee (1991), among others. In general, many of the state characteristics that these studies investigate and the results that they present, including the effect of marketsize, corporatetax rate, and the extent of similar manufacturing activity, are similar for both foreign direct investment (FDI) and all manufacturinginvestment.1 In this study, I examine if foreignowned and U.S.-
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