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The complementarity of human capital and language capital in foreign direct investment

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  • Konara, Palitha
  • Wei, Yingqi

Abstract

Integrating the literature on language-MNEs (multinational enterprises) in international business and economic theory of human capital (HC), we establish an analytical framework to systematically examine how HC and language capital (LC) jointly determine foreign direct investment (FDI). We contend that the extent to which MNEs can leverage HC in a host country for FDI depends on LC. Based on an extensive bilateral dataset covering 3315 country pairs during 1995–2008, we reveal clear evidence on the moderating role played by LC in HC-FDI relationship and such evidence is robust to different measures used for different variables, the inclusion of more control variables and different samples.

Suggested Citation

  • Konara, Palitha & Wei, Yingqi, 2019. "The complementarity of human capital and language capital in foreign direct investment," International Business Review, Elsevier, vol. 28(2), pages 391-404.
    • Handle: RePEc:eee:iburev:v:28:y:2019:i:2:p:391-404
    DOI: 10.1016/j.ibusrev.2018.10.009
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