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Factors determining the location decisions of Spanish MNEs: an analysis based on the investment development path

Author

Listed:
  • Jose I Galan

    (Departamento de Administración y Economía de la Empresa, Universidad de Salamanca, Spain)

  • Javier Gonzalez-Benito

    (Departamento de Administración y Economía de la Empresa, Universidad de Salamanca, Spain)

  • Jose A Zuñiga-Vincente

    (Departamento de Economía de la Empresa (Administración, dirección y organización), Universidad Rey Juan Carlos, Madrid, Spain)

Abstract

On the basis of theoretical assumptions approached via the investment development path (IDP), this study examines the most important factors for and against the location decisions in foreign direct investment taken by multinational enterprises, considering host countries at very different stages of economic development (Latin American and European Union countries). We carry out different kinds of analysis on a sample of 103 firms belonging to a medium-sized country that has recently achieved the status of developed country. The results reveal that the importance that home country firm managers give to diverse location factors depends to a certain extent on the stage that each group of host countries has reached in the IDP. In line with prior research, we find that firm managers consider mainly the group of factors associated with strategic asset-seeking when deciding to locate their investments in the group of more developed countries (European Union). In contrast, our results show that when these firm managers choose the group of less developed countries (Latin America), social and cultural factors play a more determinant role, thus suggesting the importance of historical and cultural ties between the home and host countries. Journal of International Business Studies (2007) 38, 975–997. doi:10.1057/palgrave.jibs.8400304

Suggested Citation

  • Jose I Galan & Javier Gonzalez-Benito & Jose A Zuñiga-Vincente, 2007. "Factors determining the location decisions of Spanish MNEs: an analysis based on the investment development path," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(6), pages 975-997, November.
  • Handle: RePEc:pal:jintbs:v:38:y:2007:i:6:p:975-997
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    Citations

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    Cited by:

    1. Newburry, William & Gardberg, Naomi A. & Sanchez, Juan I., 2014. "Employer Attractiveness in Latin America: The Association Among Foreignness, Internationalization and Talent Recruitment," Journal of International Management, Elsevier, vol. 20(3), pages 327-344.
    2. Jiménez, Alfredo & Delgado-García, Juan Bautista, 2012. "Proactive management of political risk and corporate performance: The case of Spanish multinational enterprises," International Business Review, Elsevier, vol. 21(6), pages 1029-1040.
    3. Li, Peter Ping, 2010. "Toward a learning-based view of internationalization: The accelerated trajectories of cross-border learning for latecomers," Journal of International Management, Elsevier, vol. 16(1), pages 43-59, March.
    4. Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W., 2009. "Equity-based entry modes of emerging country multinationals: Lessons from Turkey," Journal of World Business, Elsevier, vol. 44(4), pages 445-462, October.
    5. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    6. Drogendijk, Rian & Martín Martín, Oscar, 2015. "Relevant dimensions and contextual weights of distance in international business decisions: Evidence from Spanish and Chinese outward FDI," International Business Review, Elsevier, vol. 24(1), pages 133-147.
    7. Rajneesh Narula & John Dunning, 2010. "Multinational Enterprises, Development and Globalization: Some Clarifications and a Research Agenda," Oxford Development Studies, Taylor & Francis Journals, vol. 38(3), pages 263-287.
    8. Lei, Han-Sheng & Chen, Yung-Shuan, 2011. "The right tree for the right bird: Location choice decision of Taiwanese firms' FDI in China and Vietnam," International Business Review, Elsevier, vol. 20(3), pages 338-352, June.
    9. Salvador Barrios & Juan Miguel Benito, 2010. "The Location Decisions of Multinationals and the Cultural Link: Evidence from Spanish Direct Investment Abroad," Economic Papers, The Economic Society of Australia, vol. 29(2), pages 181-196, June.
    10. Cesaroni, Fabrizio & Giarratana, Marco S. & Martínez-Ros, Ester, 2012. "Technological capabilities and cost efficiency as antecedents of foreign market entry," MERIT Working Papers 049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Arild Aspelund & Vitali Butsko, 2010. "Small And Middle-Sized Enterprises' Offshoring Production: A Study Of Firm Decisions And Consequences," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(3), pages 262-275, July.
    12. repec:gam:jsusta:v:9:y:2017:i:5:p:800-:d:98285 is not listed on IDEAS
    13. João Ricardo Faria, 2016. "Location Clusters, FDI and Local Entrepreneurs: Consistent Public Policy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(4), pages 858-868, December.
    14. Giarratana, Marco S. & Martínez Ros, Ester & Cesaroni, Fabrizio, 2010. "US market entry by Spanish pharmaceutical firms," DEE - Working Papers. Business Economics. WB wb101103, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.

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