Nation Brands and Foreign Direct Investment -super-
This article studies the explanatory power of intangible factors - such as country stereotypes and consumer perceptions - for the size of foreign direct investment (FDI) flows, controlling for fundamental variables. To operationalize the concept of these intangibles we use the idea of the 'nation brand'. Nation brands are strongly related to the idea of 'country-of-origin' biases for both industrial and consumer products. It is known that the 'country-of-origin' serves often as a product characteristic, an informational cue, but also as a means of applying a heuristic for simplified decision-making. Given its role for purchase decisions, the size and direction of the country-of-origin bias should be important for multinational investors when choosing the location of production, and everything else given, investors should choose as their location of production countries to which consumers show a positive country bias. In a similar spirit, the strength of nation brands may be used as a heuristic or a source of information about the quality of a country as an investment decision. Using the EUROSTAT data on FDI flows from 30 source countries to 34 host countries for the years 2005 and 2006 and the Anholt Nation Brands Index as our measure of these intangibles, we find that this index has a significant and strong impact on FDI flows in a multivariate analysis that is based on the knowledge-capital (KC) model of FDI. The volume of FDI into a host country is shown to rise by 27 percent as its nation index, the measure for the quality of these intangibles, improves by one point. Among the six components of the index, the perceptions about a country's products, about its social and economic conditions and about cultural aspects are most relevant. Our results suggest that the nation brands index accounts for important aspects of FDI decisions that are not captured in fundamental data which explain FDI in the standard foreign trade approach to FDI. Copyright © 2010 Blackwell Publishing Ltd..
If 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.
Volume (Year): 63 (2010)
Issue (Month): 3 (08)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0023-5962|
When requesting a correction, please mention this item's handle: RePEc:bla:kyklos:v:63:y:2010:i:3:p:400-431. See general 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
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.