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The Influence of Industrial Relations Factors on U.S. Foreign Direct Investment Abroad

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  • William N. Cooke

Abstract

Although managers of multinational companies have identified labor practices and regulations, access to skilled labor, and similar factors as important considerations in foreign direct investment decision-making, few studies have empirically examined the influence of industrial relations factors on foreign direct investment. Applying a transaction costs framework to U.S. Department of Commerce data published in 1992, the author examines the influence of several key industrial relations variables on U.S. foreign direct investment across nine industries and nineteen OECD-member countries. Across the countries studied, U.S. foreign direct investment was negatively affected by the presence of high levels of union penetration, centralized collective bargaining structures, stiff government restrictions on layoffs, and pervasive contract extension policies; it was positively affected by high levels of education and policies requiring works councils.

Suggested Citation

  • William N. Cooke, 1997. "The Influence of Industrial Relations Factors on U.S. Foreign Direct Investment Abroad," ILR Review, Cornell University, ILR School, vol. 51(1), pages 3-17, October.
    • Handle: RePEc:sae:ilrrev:v:51:y:1997:i:1:p:3-17
    DOI: 10.1177/001979399705100101
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    References listed on IDEAS

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    Cited by:

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    2. Uwe Jirjahn, 2022. "On the determinants of bargaining‐free membership in German Employers' Associations," Industrial Relations Journal, Wiley Blackwell, vol. 53(6), pages 545-558, November.
    3. John W. Budd & Yijiang Wang, 2004. "Labor Policy and Investment: Evidence from Canada," ILR Review, Cornell University, ILR School, vol. 57(3), pages 386-401, April.
    4. Horst Feldmann, 2009. "The Quality of Industrial Relations and Unemployment in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 56-69, February.
    5. Mario F. Bognanno & Michael P. Keane & Donghoon Yang, 2005. "The Influence of Wages and Industrial Relations Environments on the Production Location Decisions of U.S. Multinational Corporations," ILR Review, Cornell University, ILR School, vol. 58(2), pages 171-200, January.
    6. Roxana Radulescu & Martin Robson, 2008. "Trade Unions, Wage Bargaining Coordination, and Foreign Direct Investment," LABOUR, CEIS, vol. 22(4), pages 661-678, December.
    7. Michele Campolieti & Robert Hebdon & Benjamin Dachis, 2014. "The Impact of Collective Bargaining Legislation on Strike Activity and Wage Settlements," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 394-429, July.
    8. Cao, Jiyun & Mukherjee, Arijit, 2018. "Foreign direct investment, unionised labour markets and welfare," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 330-339.
    9. Mendoza, Ronald U. & Canare, Tristan A. & Ang, Alvin, 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Research Paper Series DP 2015-37, Philippine Institute for Development Studies.
    10. Peters Ralf-Henning & Schneider Kerstin, 2000. "Die Struktur kollektiver Lohnverhandlungen und ausfließende Direktinvestitionen in der OECD / The Structure of Collective Bargaining and Foreign Investment Outflows in the OECD," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(1), pages 48-63, February.
    11. Uwe Jirjahn, 2017. "Globalisierung und betriebliche Mitbestimmung," Research Papers in Economics 2017-05, University of Trier, Department of Economics.
    12. Marlies Kluike & Kerstin Pull, 2013. "Similar, but still different: how US multinational companies in Germany and Switzerland use host-country training and skill practices," Industrial Relations Journal, Wiley Blackwell, vol. 44(5-6), pages 495-513, November.
    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. John S. Heywood & Uwe Jirjahn, 2014. "Variable Pay, Industrial Relations and Foreign Ownership: Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 521-552, September.
    15. Dewit, Gerda & Leahy, Dermot & Montagna, Catia, 2012. "Employment Protection, Flexibility and Firms’ Strategic Location Decisions under Uncertainty," SIRE Discussion Papers 2012-24, Scottish Institute for Research in Economics (SIRE).
    16. Krzywdzinski, Martin, 2014. "Do investors avoid strong trade unions and labour regulation? Social dumping in the European automotive and chemical industries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 28(6), pages 926-945.
    17. Ang, Alvin & Mendoza, Ronald U. & Canare, Tristan A., 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Discussion Papers DP 2015-37, Philippine Institute for Development Studies.
    18. Gerda Dewit & Dermot Leahy & Catia Montagna, 2013. "Employment Protection, Flexibility and Firms' Strategic Location Decisions under Uncertainty," Economica, London School of Economics and Political Science, vol. 80(319), pages 441-474, July.
    19. Mauro F. Guillén, 2000. "Organized Labor's Images of Multinational Enterprise: Divergent Foreign Investment Ideologies in Argentina, South Korea, and Spain," ILR Review, Cornell University, ILR School, vol. 53(3), pages 419-442, April.

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