Political governance, civil liberties, and human capital: Evaluating their effect on foreign direct investment in emerging and developing economies

Abstract

We study the influence of a country's political governance on its attractiveness to foreign direct investors. We argue that democracy is not a unidimensional concept and that the effect of host country political governance on incoming Foreign Direct Investment (FDI) differs depending on whether FDI originates from a democratic or an autocratic country. We also hypothesize that the effect of civil liberties depends on the motivations of investing Multinational Enterprises (MNEs) and that human capital moderates this relationship. We test our hypotheses on a sample of 35,000 investments in emerging and developing countries between 2003 and 2013.

Still in search of strategic human resource management? A review and suggestions for future research with China as an example

“…In reality, company background, in terms of, for example, size, history, ownership form, industrial sector, and nationality, may have profound influence in shaping management strategy, policy and practice. The importance of context in SHRM research has been well argued by a number of scholars (Cascio, 2015; Jackson & Schuler, 1995; Jackson et al, 2014; Kaufman, 2015a; see also Filippaios, Annan‐Diab, Hermidas, & Theodoraki, 2019). For Paauwe and Boselie (2003, p. 56), “differences in embeddedness and in institutional settings between, for example, countries affect the nature of HRM.” They use the theory of new institutionalism to demonstrate “a better way to understand the shaping of HR policies and practices in different settings” (Paauwe & Boselie, 2003, p. 56).…”

The structural reshaping of globalization: Implications for strategic sectors, profiting from innovation, and the multinational enterprise

“…In fact, Verbeke et al (2018Verbeke et al ( : 1103 point out in their recent JIBS editorial that ''the simple observation still remains that most of even the world's largest firms are incapable of emulating the same level of home region success … throughout the world, because ''distance'' does continue to matter.'' While globalization has made geographic distance less significant, the economic, political, structural, and especially technological, distances and boundaries between and amongst countries and regions are complex and continue to persist (e.g., Filippaios, Annan-Diab, Theodoraki, & Hermidas, 2019;Jackson & Deeg, 2019;Peterson, Søndergaard, & Kara, 2018). This is increasingly requiring development and deployment of MNE capabilities that are context-specific.…”

Political elections and corporate investment: International evidence

“…For instance, Azzimonti (2019) shows that foreign direct investment in the US is affected by party conflicts over trade policies, whereas Liu and Li (2019) shows that terrorism drives divestment decisions. Other factors such as political governance and civil liberties matter too for foreign direct investment decisions (Filippaios et al 2019).…”

“…In so doing, we also expand the literature on the role of political institutions for corporate strategies. Works in this area have studied a wealth of institutional characteristics at the international and local level (Chan et al 2010;Delios & Henisz, 2003;Filippaios et al 2019;Holburn & Zelner, 2010;Mudambi & Navarra, 2003;Murtha & Lenway, 1994) also including political risk factors (Azzimonti, 2019;Beazer & Blake, 2018;Liu & Li, 2020). Yet, the role of electoral systems has been largely neglected.…”