Heterogeneous firm response to organized crime: Evidence from FDI in Mexico

Ramos, Miguel A.; Ashby, Nathan J.

doi:10.1016/j.intman.2013.01.002

Cited by 33 publications

(39 citation statements)

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“…Darendelli & Hill, 2016;Goerzen, Sapp & Delios, 2010;Holburn & Zelner, 2010). Yet, this literature largely overlooks the interrelations with the industrybased viewa significant gap given the evidence that the sector in which an MNE operates matters for its location choice decisions in countries with weak institutions (Burger et al, 2016;Driffield et al, 2013;Garcia-Canal & Guillén, 2008;Ramos & Ashby, 2013;Schotter & Beamish, 2013). Nevertheless, theory on the mechanisms that explains these heterogeneous effects is lacking.…”

Section: Introductionmentioning

confidence: 99%

Dodging bullets: The heterogeneous effect of political violence on greenfield FDI

et al. 2017

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The relationship between political violence and greenfield foreign direct investment is contingent on the type of violence, the characteristics of the investment-receiving sector, and the international scope of the investing firm. Analysis with a dynamic fixed effects model for a panel of 90 developing countries shows that nationwide political conflict is negatively associated with total and non-resource-related greenfield FDI, but not with resource-related greenfield FDI. The insensitivity of resource FDI to political conflict is explained by the high profitability of natural resource extraction and geographic constraints on location choice. In the non-resource sector, the least geographically diversified firms are most sensitive to conflict. Other types of political violence, including intermittent violence in the form of terrorist acts and assassinations, or persistent but low-impact events, such as political terror, have no effect on the location choice decisions of multinational enterprises. These findings inform the strategies of multinationals with a nuanced and much needed understanding of the effects of political violence and the risks it poses to their businesses. * We are grateful for the helpful comments from the editor, Mona Makhija, and three anonymous referees. Early versions of this paper were presented at the Center for the Study of African Economies (CSAE) Conference 2015 and the 2015 AIB Annual Meeting in Bangalore. We would also like to thank seminar participants at Ivey Business School, Copenhagen Business School, the University of Groningen and the Erasmus School of Economics for their useful suggestions.

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Section: Introductionmentioning

confidence: 99%

Dodging bullets: The heterogeneous effect of political violence on greenfield FDI

et al. 2017

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“…Following this logic, EMNEs' expansion into risky countries is commonly attributed to political capabilities nurtured in the home country where firms have learned to cope with underdeveloped institutions (Cuervo-Cazurra & Genc, 2008;Holburn & Zelner, 2010). Empirical research reveals that FDI from countries with high corruption levels is evidently clustered in other corrupt countries (Cuervo-Cazurra, 2006), while firms from countries with organized crime problems proactively seek business opportunities in other countries with persistent organized crime (Ramos & Ashby, 2013).…”

Section: The Capabilities Explanation On Fdi Risk-takingmentioning

confidence: 99%

Risk propensity in the foreign direct investment location decision of emerging multinationals

et al. 2017

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“… Some aggregate, cross‐national studies suggest that widespread homicide depress FDI flows (Blanco et al, ). But in Mexico, the results of studies of FDI in the manufacturing and other sectors are mixed (e.g., Ramos & Ashby, ). …”

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Foreign direct investment flows to Mexican states: A study of the automobile industry, 2004–2014

Tuman

Erlingsson

2019

Growth and Change

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This study examines the subnational flow in foreign direct investment (FDI) to Mexican states, with a focus on the finished vehicle industry. Although prior studies have examined subnational FDI in Mexico, research on the automobile sector has been scant. Utilizing a framework associated with the theory of asset specificity, we examine the influence of human capital and labor conditions, infrastructure, subnational policies, and security. The study employs a data set on finished vehicle FDI across 31 states and the Federal district for the period of 2004–2014. We adopt a two‐part model. The first part, which includes all states and the Federal district, is estimated with pooled logistic and Firth logistic regressions. In the second part, we examine variation in levels of FDI among states selected for investment with pooled ordinary least squares with panel‐corrected and Driscoll Kraay standard errors. Labor conditions are significant for both state selection and levels of FDI, but education is influential only in the selection stage. In addition, states with trunk rail lines linked to the U.S. border are more likely to be selected and receive higher FDI. After controlling for these influences, murder and homicide rates, and state development have no significant effects.

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Heterogeneous firm response to organized crime: Evidence from FDI in Mexico

Cited by 33 publications

References 50 publications

Dodging bullets: The heterogeneous effect of political violence on greenfield FDI

Dodging bullets: The heterogeneous effect of political violence on greenfield FDI

Risk propensity in the foreign direct investment location decision of emerging multinationals

Foreign direct investment flows to Mexican states: A study of the automobile industry, 2004–2014

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