Factors determining the location decisions of Spanish MNEs: an analysis based on the investment development path

Abstract

On the basis of theoretical assumptions approached via the investment development path (IDP), this study examines the most important factors for and against the location decisions in foreign direct investment taken by multinational enterprises, considering host countries at very different stages of economic development (Latin American and European Union countries). We carry out different kinds of analysis on a sample of 103 firms belonging to a medium-sized country that has recently achieved the status of developed country. The results reveal that the importance that home country firm managers give to diverse location factors depends to a certain extent on the stage that each group of host countries has reached in the IDP. In line with prior research, we find that firm managers consider mainly the group of factors associated with strategic asset-seeking when deciding to locate their investments in the group of more developed countries (European Union). In contrast, our results show that when these firm managers choose the group of less developed countries (Latin America), social and cultural factors play a more determinant role, thus suggesting the importance of historical and cultural ties between the home and host countries. Journal of International Business Studies (2007) 38, 975–997. doi:10.1057/palgrave.jibs.8400304

From the Editors: Common method variance in international business research

“…This should reduce method biases caused by commonalities in scale endpoints and anchor effects. In a recently published JIBS article on the international location decision, for instance, Galan, González-Benito, and Zuñiga-Vincente (2007) measured the dependent variable in two different ways so as to avoid potential CMV with independent variables that were operationalized as perception-based measures.…”

Japanese MNCs Investment Objectives and Subsidiary Performance

“…As illustrated in Figure 2, there are significant differences between LDCs and DCs in four perspectives (i.e., the level of FDI, the type of basic location advantages, the reason why FDI was received, and the most relevant locational factors for attracting FDI). Previous research by Galan, González-Benito & Zuñga-Vincente (2007) & Dunning, (2000) www.ccsenet.org/ijbm…”

Unsupervised neural models for country and political risk analysis

“…(Galan et al, 2007) contains an interesting table with a profuse bibliography of empirical studies that analyze the importance of certain investment-attraction factors. However, it may be said that the analysis of political risk as a fundamental factor in the location of direct investment has received far less attention than other factors, with the notable exceptions of (Marois, 1979(Marois, , 1981 for French MNEs, (Rich & Mahmoud, 1990) for Canadian MNEs, (Mortanges & Allers, 1996) for Dutch MNEs, (Mutinelli & Piscitello, 1997) for Italian ones and (Noordin et al, 2006), the last-named work being one of the few to centre on multinational enterprises in a less-developed countries; in this case Malaysia.…”

“…It also aims to determine whether the importance attributed to these variables is modified by the geographic region in which they intend to set up the subsidiary. Moreover, the selection of Spain, a country that over the past 30 years has become a member of the group of developed countries, will allow us to consider the possibility of applying generalizations to other recently developed countries (Galan et al, 2007).…”