Location decisions of inward FDI in sub-national regions of a host country: Service versus manufacturing industries
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AbstractBuilt on the differences between services and manufacturing sectors, this study examines the general proposition that service and manufacturing multinational enterprises (MNEs) have different responsiveness to location-specific characteristics when conducting foreign direct investment (FDI), and that these differences influence their final locations in the sub-national regions of a host country. Using a full population of 1,212 and 6,199 inward FDI projects conducted by MNEs in manufacturing and services sectors, respectively, across 234 sub-national regions in Korea between 2000 and 2004, it finds that the location decisions made by service MNEs are more likely to be driven by demand-side considerations, whereas those made by manufacturing MNEs are more likely to be influenced by supply-side characteristics of sub-national regions. In addition, it shows that sub-national location decisions made by both high-tech and low-tech manufacturing MNEs consider the availability of local strategic assets within a focal region more importantly than that from its neighboring regions, suggesting the importance of intra-regional effects. Sub-national location decisions made by location-bound service MNEs exhibit the same intra-regional effects for local market potential; however, those by non-location-bound service MNEs consider the local market potential from neighboring regions more importantly than that within a focal region, suggesting the existence of inter-regional effects.
All Author(s) ListIn Hyeock (Ian) Lee, Eunsuk Hong, Shige Makino
Journal nameAsia Pacific Journal of Management
Volume Number33
Issue Number2
PublisherSpringer Verlag
Pages343 - 370
LanguagesEnglish-United States
KeywordsMNEs, Inward FDI, Service industries, Manufacturing industries, Location strategy, Sub-national regions

Last updated on 2020-28-09 at 02:19