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Determinants of firms' investment behaviour: a multilevel approach

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  • K. Farla

Abstract

This article investigates the determinants of firms' investment behaviour using firm data from 101 developing and emerging economies. A substantial number of firms does not invest in fixed capital or invests little relative to sales revenue. Using a multilevel probit model we study what factors trigger investment, and using a multilevel Heckman selection model we study what factors influence a firm's investment-to-sales ratio. We find that firms' investment behaviour has relatively little dependency on a country's macroeconomic setting. Additionally, we find that, on average, firms that are completely foreign-owned have a relatively lower investment-to-sales ratio. Finally, we find evidence which suggests that the probability of investing is higher for firms located in countries with more control of corruption and we find some evidence which suggests that partially foreign-owned firms located in countries with relatively less corruption have a relatively higher investment-to-sales ratio.

Suggested Citation

  • K. Farla, 2014. "Determinants of firms' investment behaviour: a multilevel approach," Applied Economics, Taylor & Francis Journals, vol. 46(34), pages 4231-4241, December.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:34:p:4231-4241
    DOI: 10.1080/00036846.2014.955167
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    Cited by:

    1. Joël Cariolle & Petros G Sekeris, 2021. "How export shocks corrupt: theory and evidence," Working Papers hal-03164648, HAL.
    2. Zając, Adam Andrzej & Wielechowski, Michał & Smoleń, Krzysztof & Karaś, Dariusz, . "Makroekonomiczne determinanty decyzji inwestycyjnych średnich i dużych przedsiębiorstw sektora przetwórstwa przemysłowego w Polsce," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2024(4).
    3. Claudiu Tiberiu Albulescu, 2020. "Investment Behaviour and Firms’ Financial Performance: A Comparative Analysis Using Firm-Level Data from the Wine Industry," International Journal of Management, Knowledge and Learning, ToKnowPress, vol. 9(1), pages 75-94.
    4. Joël CARIOLLE, 2018. "Corruption determinants in developing and transition economies: Insights from a multi-level analysis," Working Papers P229, FERDI.
    5. Samyukta Bhupatiraju, 2020. "Multi-level Determinants of Inward FDI Ownership," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(2), pages 327-358, June.
    6. Claudiu Tiberiu Albulescu & Matei Tămășilă & Ilie Mihai Tăucean, 2021. "The Nonlinear Relationship Between Firm Size and Growth in the Automotive Industry," Journal of Industry, Competition and Trade, Springer, vol. 21(3), pages 445-463, September.
    7. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    8. Maria Magdalena Turek Rahoveanu & Adrian Turek Rahoveanu & Cristian Popescu & Gheorghe Adrian Zugravu, 2015. "Entrepreneurial Potential In The Territory Gal Microregion Horezu Village From The Perspective Of 2014-2020," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 397-408.
    9. Claudiu Tiberiu Albulescu & Şerban Miclea & Simina Silvana Suciu & Matei Tămăşilă, 2018. "Firm-level investment in the extractive industry from CEE countries: the role of macroeconomic uncertainty and internal conditions," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 193-208, June.
    10. Valeriya Azarova & Mathias Mier, 2021. "Investor Type Heterogeneity in Bottom-Up Optimization Models," ifo Working Paper Series 362, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    11. Stelian STANCU & Eugenia GRECU & Mirela Ionela ACELEANU & Daniela Livia TRAŞCĂ & Claudiu Tiberiu ALBULESCU, 2021. "Does Firm Size Matters for Firm Growth? Evidence from the Romanian Health Sector," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 17-31, December.
    12. Vojtěch Olbrecht, 2016. "Multilevel Modeling in Exploring Institutional Effects on Performance," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 2087-2094.
    13. Zając, Adam Andrzej & Wielechowski, Michał & Smoleń, Krzysztof & Karaś, Dariusz, . "Makroekonomiczne determinanty decyzji inwestycyjnych średnich i dużych przedsiębiorstw sektora przetwórstwa przemysłowego w Polsce," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2024(4).

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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