Cross-national distance impact on FDI strategic decisions into Portugal: Evidence from Eurozone and Ibero-America

Abstract

Purpose: The purpose of this paper is to assess if MNEs from the Eurozone and Ibero-America have different sensitivities to cross-national distance when investing in Portugal, by comparison with non-Eurozone and non Ibero-American MNEs.Methodology: Using qualitative variables on a panel data analysis, we are able to assess the differentiated effects of cross-national distance on MNEs from members and non-members of both groups of countries.Findings: Results suggest that sensitivities are indeed differentiated, with a notable exception of administrative distance which remains with a negative effect throughout all groups.Originality: This research contributes to international business/management literature in the extent that it explores the relationship between cross-national distance and one of the most important international strategic decisions, FDI. It also addresses Portugal’s monetary integration in the Eurozone and the historic and cultural ties with Ibero-American countries.

A Gravity Model Analysis of Portuguese Foreign Direct Investment

“…Furthermore, it is observed that economic distance (measured by market size) promotes FDI inflows. In this line, the study by Duarte and Carvalho (2019) carried out for FDI inflows from Eurozone and Ibero-American countries from 2003 to 2015 demonstrated that the economic dimension and geographical proximity measured by the border have a more significant impact on the Portuguese FDI.…”