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Supply chain capability of countries and its effect on foreign direct investment: a fuzzy-set analysis

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  • Arshad Alam
  • Prabir K. Bagchi

Abstract

International plant location decisions have acquired relevance in a globalised economy and evidence suggests that the overall production and logistics environment of a country would have a bearing on foreign direct investment (FDI). This study attempts to analyse the impact of the production and logistics environment on incoming FDI. We introduce a new conceptual framework of supply chain capability (SCC) of countries and using the 'fuzzy-set analysis' methodology attempt to determine whether SCC is a necessary or sufficient cause for FDI flows. This study validates the basic proposition that supply chain capability of a country is a determinant of FDI. Further, the study suggests that the FDI attractiveness of a country is better explained by a combination of factors as reflected by the composite variable, SCC, than by individual constituent variables. This study offers insights to firm managers to evaluate various competing country environments, thus enabling them to make better strategic decisions about foreign investment.

Suggested Citation

  • Arshad Alam & Prabir K. Bagchi, 2013. "Supply chain capability of countries and its effect on foreign direct investment: a fuzzy-set analysis," International Journal of Logistics Economics and Globalisation, Inderscience Enterprises Ltd, vol. 5(1), pages 59-80.
    • Handle: RePEc:ids:injleg:v:5:y:2013:i:1:p:59-80
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