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Firm- and Country-Level Trade-offs and Contingencies in the Evaluation of Foreign Investment: The Semiconductor Industry, 1994–2002

Author

Listed:
  • Witold J. Henisz

    (The Wharton School, 3115 Steinberg Hall–Dietrich Hall, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6370)

  • Jeffrey T. Macher

    (McDonough School of Business, G-04 Old North, Georgetown University, Washington, D.C. 20057)

Abstract

This paper examines the joint impact of firm- and country-level factors on the international plant location decisions of semiconductor firms from 1994–2002. We find that these factors interact to influence the location decisions of firms investing abroad in a given host country. Firms with more advanced technological capabilities are more likely to make investments in countries with greater technological sophistication but not in politically hazardous countries where they face greater expropriation hazards. Firms with less-advanced technology are more willing to accept a trade-off between country-level political hazards and technological sophistication. Firms also trade off own- versus other-firm experience as sources of critical knowledge regarding the foreign investment environment.

Suggested Citation

  • Witold J. Henisz & Jeffrey T. Macher, 2004. "Firm- and Country-Level Trade-offs and Contingencies in the Evaluation of Foreign Investment: The Semiconductor Industry, 1994–2002," Organization Science, INFORMS, vol. 15(5), pages 537-554, October.
    • Handle: RePEc:inm:ororsc:v:15:y:2004:i:5:p:537-554
    DOI: 10.1287/orsc.1040.0091
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    References listed on IDEAS

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