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The Location Choices of Multinational Firms: The Role of Internationalisation Experience and Group Affiliation
Author(s) -
Gazaniol Alexandre
Publication year - 2015
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12186
Subject(s) - multinational corporation , internationalization , foreign direct investment , business , international trade , international economics , economics , finance , macroeconomics
This paper investigates whether location choices of multinational firms depend on their past export, import or Foreign Direct Investment ( FDI ) experience on foreign markets or the experience of other affiliated firms. Regardless of locations' characteristics, we find that exporting in a given country, and to a smaller extent importing from it, significantly increases the probability of investing in that particular country the following year. This preliminary exporting phase appears more important for firsttime investors. Moreover, location choices not only depend on the investor's own international experience, but also on the international experience of other affiliated firms: firms tend to invest in countries where the group already exports or owns a local affiliate. These last findings suggest the existence of coordinated strategies and/or information sharing between affiliated firms.