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Firm Size and Foreign Direct Investment

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  • Blomstrom, Magnus
  • Lipsey, Robert E.

Abstract

This paper examines the importance of firm size in explaining foreign direct investment with data from American and Swedish firms. The results suggest that firm size only has a threshold effect on foreign investment, an effect on the decision to invest abroad. Once, however, a firm has jumped the initial barriers to foreign production, size has no effect on the fraction of the firm's resources devoted to foreign activity. Among firms that invest in foreign production large firms do not appear to have any particular advantage over small investing firms.
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Suggested Citation

  • Blomstrom, Magnus & Lipsey, Robert E., 1986. "Firm Size and Foreign Direct Investment," Working Papers 86-34, C.V. Starr Center for Applied Economics, New York University.
    • Handle: RePEc:cvs:starer:86-34
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    References listed on IDEAS

    as
    1. Caves, Richard E, 1974. "Causes of Direct Investment: Foreign Firms' Shares in Canadian and United Kingdom Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 279-293, August.
    2. Horst, Thomas, 1972. "Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 258-266, August.
    3. Sanjaya Lall & Paul Streeten, 1977. "Foreign Investment, Transnationals and Developing Countries," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02290-8, May.
    4. Robert E. Lipsey & Irving B. Kravis & Linda O'Connor, 1983. "Characteristics of U.S. Manufacturing Companies Investing Abroad and their Choice of Production Locations," NBER Working Papers 1104, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Nishitateno, Shuhei, 2013. "Global production sharing and the FDI–trade nexus: New evidence from the Japanese automobile industry," Journal of the Japanese and International Economies, Elsevier, vol. 27(C), pages 64-80.
    2. Dimitris Giakoulas & Constantina Kottaridi, 2020. "Internationalization Strategies of the Greek MNEs during the Pre-Crisis Period: An Econometric Research Based on the OLI Model," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 70(1-2), pages 128-150, January-J.
    3. Bikash Ranjan Mishra, Dr., 2011. "Spill-over effects of foreign direct investment: an econometric study of Indian firms," MPRA Paper 37759, University Library of Munich, Germany.
    4. Mishra, Bikash Ranjan, 2011. "Inward FDI and firm-specific advantages of Indian manufacturing industries," MPRA Paper 35119, University Library of Munich, Germany.
    5. Wang, Kai & Ding, Ning & Wang, Chenbo, 2025. "Supply chain finance and outward foreign direct investment," Research in International Business and Finance, Elsevier, vol. 73(PA).
    6. Lin Sun & Kexuan Zhou & Linhui Yu, 2020. "Does the reduction of regional trade policy uncertainty increase Chinese enterprises' outward foreign direct investment? Evidence from the China−ASEAN Free Trade Area," Pacific Economic Review, Wiley Blackwell, vol. 25(2), pages 127-144, May.
    7. Zhou, Kexuan & Kumar, Sanjay & Yu, Linhui & Jiang, Xinlin, 2021. "The economic policy uncertainty and the choice of entry mode of outward foreign direct investment: Cross-border M&A or Greenfield Investment," Journal of Asian Economics, Elsevier, vol. 74(C).

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