Jurisdiction shopping and foreign location choice: The role of market and nonmarket experience in the European solar energy industry

Abstract

Several countries provide policy support to specific sectors in order to facilitate industry transitions. While industry-support policies stimulate the growth of their target sectors, little is known about how such policies engender heterogeneous international strategies. In this article, we investigate how industry-support policies influence foreign location choices. We argue that firms engage in jurisdiction shopping, choosing to invest in countries with more generous policy support, but that this tendency varies markedly across firms. Specifically, we suggest that firms’ nonmarket experience exacerbates the effect of policy support on location choice, whereas market experience has less of an impact. Further, we propose that some firms view generous policies more skeptically than others, depending on the nature of their nonmarket experience. We test and find support for our predictions using a longitudinal dataset of foreign investments of firms entering the solar energy industry in the European Union. Our findings indicate that supportive policies stimulate the energy transition, attracting in particular foreign entrants diversifying into renewables or having more policy experience. At the same time, they suggest that adverse policy changes in one country affect how firms assess policies in other countries, highlighting the need for policy coordination at a supranational level.

Reinvestment and effective corporate income tax rates in V4 countries

“…Contrary to the research of Agodo (1978), Lundan (2006), Nguyen and Rugman (2015), and Georgallis et al (2021), our results demonstrate that only the corporate income tax rate (either statutory or effective) and selected dimensions of the Doing Business index show a statistically robust effect on the reinvestment rate. Our findings are even more striking when faced with the conclusions of Dobrovic et al (2018), who emphasise the need for a stable and predictable tax system that can motivate TNCs to consider profit reinvestment beneficial.…”

Corporate Political Activity, Reimagined: Revisiting the Political Marketplace

“…Further, tactics such as dormancy (i.e., temporary reduction in firms' activity in response to detrimental public policy; Kozhikode, 2016), venue shifting (Georgallis, Pimentel, & Kondratenko, 2021;Ingram & Rao, 2004;Kozhikode, 2016;Somaya & McDaniel, 2012), self-regulation, and regulatory co-creation (Delmas & Montes-Sancho, 2010;Gao & McDonald, 2022;Hou & Yao, 2022;Werner, 2012) may not necessarily be classified as financial, informational, or constituency-building strategies. Although such tactics undoubtedly represent CPA in that they allow firms to influence their governmental outcomes, most of them do not require interaction with focal governmental actors (i.e., those that currently have jurisdiction over the firm, and therefore have the power to decide on its political outcomes), instead shifting the interaction to future governmental actors (e.g., dormancy), governmental actors in other jurisdictions (e.g., venue shifting), and even the firm itself (e.g., self-regulation and regulatory co-creation).…”

“…As another example, due to regulatory capture by incumbent firms, new entrants may seek out ways to disrupt the status quo by breaking regulations, rather than attempting to influence politicians (Paik et al, 2019). Additionally, as mentioned above, firms may also choose to abstain from political exchanges with focal political actors, engaging instead in venue-shifting (Georgallis et al, 2021;Ingram & Rao, 2004;Somaya & McDaniel, 2012), self-regulation (Hou & Yao, 2022;Werner, 2012), or even dormancy (Kozhikode, 2016). In other words, whether due to their inability or unwillingness, not all firms participate in all types of CPA.…”

E-commerce Policy and the Global Economy: A Path to More Inclusive Development?

“…Through public policies, governments can decide – within their capacity – whether to act to change or maintain some aspect of the status quo (Birkland 2019 ; Howlett and Cashore 2014 ). Governments, for example, can design and implement policies to prioritize the allocation of resources toward the development of a specific sector (Georgallis et al 2021 ).…”