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Profiting from FDI in conflict zones

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  • Chen, Stephen

Abstract

This paper examines how firm experience with armed conflict and host country engagement in conflict jointly affect the profitability of foreign subsidiaries. We test our hypotheses using a sample comprising 33,620 observations of foreign subsidiaries of 693 UK firms in 212 countries over the period 1999–2008. We show that (1) firm experience with conflict has a horizontal S-shaped relationship with subsidiary profitability, (2) extrastate conflict in the host country is positively related to subsidiary profitability and (3) the impact of firm experience with conflict is negatively moderated by the level of engagement of the host country in extrastate conflicts.

Suggested Citation

  • Chen, Stephen, 2017. "Profiting from FDI in conflict zones," Journal of World Business, Elsevier, vol. 52(6), pages 760-768.
    • Handle: RePEc:eee:worbus:v:52:y:2017:i:6:p:760-768
    DOI: 10.1016/j.jwb.2017.06.005
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    4. Chang Liu & Dan Li & Lorraine Eden & Marjorie A. Lyles, 2022. "Danger from a distance: Executives' social distance and multinationals' responses to host‐country terrorist attacks," Strategic Management Journal, Wiley Blackwell, vol. 43(11), pages 2414-2443, November.
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    8. Lee, Hyoungjin & Chung, Chris Changwha, 2022. "Go small or go home: Operational exposure to violent conflicts and foreign subsidiary exit," Journal of World Business, Elsevier, vol. 57(6).
    9. Dimitrova, Anna & Triki, Dora & Valentino, Alfredo, 2022. "The effects of business- and non-business-targeting terrorism on FDI to the MENA region: The moderating role of political regime," International Business Review, Elsevier, vol. 31(6).
    10. Alvaro Cuervo-Cazurra & Patricio Duran & Jean-Luc Arrègle & Marc van Essen, 2023. "Host Country Politics and Internationalization," Post-Print hal-04381312, HAL.
    11. Jiménez, Alfredo & Lupton, Nathaniel C., 2021. "Terrorism hazard and infrastructure projects: The moderating role of home experience and institutions," Journal of Business Research, Elsevier, vol. 135(C), pages 721-730.
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