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Does the explanatory power of the OLI approach differ among sectors and business functions? Evidence from firm-level data

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  • Arvanitis, Spyros
  • Hollenstein, Heinz
  • Stucki, Tobias

Abstract

As services and goods differ with respect to important characteristics, one may expect that the determinants of internationalisation are not identical for services and manufacturing. Surprisingly, there is practically no firm-level research contrasting the two sectors in this respect. To fill this gap, the authors aim at identifying for the two sectors the determinants of a firm's propensity to engage in exports or FDI as well as the factors determining a firm's FDI strategy in terms of business functions. They find that an OLI-based model is well suited for explaining the propensity to go international as well as the differences between specific forms of FDI in terms of business functions both for manufacturing and services. As expected, the explanatory power of the OLI approach is stronger for manufacturing than service activities.

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  • Arvanitis, Spyros & Hollenstein, Heinz & Stucki, Tobias, 2016. "Does the explanatory power of the OLI approach differ among sectors and business functions? Evidence from firm-level data," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-46.
    • Handle: RePEc:zbw:ifweej:201612
    DOI: 10.5018/economics-ejournal.ja.2016-12
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    More about this item

    Keywords

    FDI; Manufacturing vs. services internationalisation; offshoring vs. exports; internationalisation of business functions; multinational companies; international business;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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