Are multinationals afraid of social violence in emerging markets?: Evidence from the Indonesian provinces
AbstractPurpose – The fact that previous studies regarding the effects of social violence on foreign direct investment (FDI) flows come to contradictory conclusions motivates this paper. Therefore, it seeks to investigate the social violence-FDI relationship in an ethnically heterogeneous and resource-rich country, Indonesia. Design/methodology/approach – The theoretical framework of the paper examines the social violence-FDI relationship and identifies the circumstances under which social violence in the host country adversely affects FDI inflows. The empirical analysis uses a unique dataset that consists of FDI flows and different types of social violence in 26 provinces of Indonesia during the period 1992-2001. A fixed-effects regression is applied to estimate the effects of social violence on FDI flows in Indonesian provinces. Findings – The results indicate that only certain types of social violence such as ethnic and industrial relations violence are detrimental to FDI. Multinational firms seem to differentiate among the several types of social violence and respond only to those that may affect their expected future profits. Practical implications – The immediate policy implication of this result implies that developing countries having the desire to attract FDI flows should be aware of the fact that multinational firms seem to differentiate among the several types of social violence and respond only to those that may affect their expected future profits. Originality/value – This paper contributes to the literature in two ways. First, the dataset employed in the empirical analysis is unique in that it contains different types of social violence and associated damage in a country. Second and because of the first point, the empirical findings provide an explanation of the conflicting results reported in the literature regarding the social violence-FDI relationship.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Journal of Economic Studies.
Volume (Year): 34 (2007)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Harris).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.