The Effects of Foreign Direct Investment Colocation: Differences Between Manufacturing and Service Firms | Zendy

Zschoche Miriam | Zendy

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The Effects of Foreign Direct Investment Colocation: Differences Between Manufacturing and Service Firms

Author(s) -

Zschoche Miriam

Publication year - 2016

Publication title -

managerial and decision economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.288

H-Index - 51

eISSN - 1099-1468

pISSN - 0143-6570

DOI - 10.1002/mde.2730

Subject(s) - economies of agglomeration , competition (biology) , industrial organization , foreign direct investment , manufacturing , business , service (business) , tertiary sector of the economy , scale (ratio) , economies of scale , economics , microeconomics , marketing , macroeconomics , ecology , physics , quantum mechanics , biology

Colocation may result in positive performance effects because of agglomeration benefits or in negative outcomes because of fiercer competition. Using the notions of industrial organization economics, this study offers a comprehensive industry‐specific analysis on the performance effects of international colocation. We predict that bigger firms will benefit more from colocation of foreign firms in a host country. Considering industry and home country peers, the analysis suggests that positive effects dominate for manufacturing firms whereas service firms are negatively affected. However, these effects are mitigated by a firm's size in a location. A large‐scale empirical analysis on firm‐level data supports the hypotheses. Copyright © 2015 John Wiley & Sons, Ltd.

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