Determinants of inward foreign direct investment: the case of the Netherlands

Abstract

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Roles of foreign owned subsidiaries in a small economy

“…This study shows that particularly MNEs from outside the trading block use their subsidiary as regional product mandate hubs or export platforms in a small economy. Therefore, small economies have to offer an above average level of specific advantages, such as infrastructure, skills and technological knowledge, the presence of other firms with the technological capabilities to create and to absorb spillovers to become attractive markets for these MNEs (Birkinshaw & Hood, 1998;Hogenbirk, 2002;Shaver, 1998). The establishment of a subsidiary in a small economy could then be beneficial for both the MNE and the small economy.…”

“…Of all the over 7000 foreign owned subsidiaries in the Netherlands, we selected the 469 foreign owned establishments in the electronics industry. We got 127 responses (27.1%) (Hogenbirk, 2002). Eighty-six firms returned a completed questionnaire (18.3%).…”

“…Due to its favourable location and active role within the European Union, many strategic export-oriented MNE subsidiaries have chosen the Netherlands as a base for their activities for the entire European continent. Many of these MNE subsidiaries in the Netherlands are characterised as export platforms or mandated hubs (Hogenbirk, 2002). We selected the electronics and electrical applications industry because it reveals a notably export-oriented and a host-market focus (Pearce & Papanastassiou, 1997).…”

Globalization in the Netherlands

“…The factors that make the Netherlands an attractive host for FDI largely match the characteristics of the Dutch Porter diamond discussed above. Foreign entrepreneurs have always favoured the Netherlands for their investments in Europe because of several specifi c factors (Hogenbirk, 2002;van Nieuwkerk and Sparling, 1985;Sparling, 2002), such as its strategic location in relation to the hinterland with good infrastructural facilities (large rivers and good road links). Many chemical companies such as DuPont, Hoechst, Dow Chemical, ICI, Exxon, Texaco/BP and Kuwait Petroleum chose the Netherlands for this reason (Minne, 1997).…”

“…This is an exceptional position for such a small economy as well. More than 7000 foreign affi liates were operating in the Netherlands during the last decade (Hogenbirk, 2002;Hogenbirk and van Kranenburg, 2006).This chapter analyses the characteristics of the Dutch economy that have allowed this…”