Strategic Factors Affecting Foreign Direct Investment Decisions by Multi-National Enterprises in Latin America

Document Type

Article

Publication Date

8-1-2004

Department

Management and International Business

Abstract

Cross-country differences in macroeconomic and institutional environments are used to explain NINE behavior, as proxied by foreign direct investments (FDIs) inflows to seven Latin American countries, namely Argentina, Brazil, Chile, Columbia, Mexico, Peru and Venezuela for the period 1988-1999. Results indicate that the institutional approach is dominant, thus supporting recent FDI research that has included statistical measures of institutional reform in their models. Since MNEs must conform to the institutional environment prevailing in the host country, managers should undertake FDI where there is minimal institutional distance between the home and the host country environments. In addition, government officials should place increased emphasis on institutional reform if their objective is to increase inward FDI in their countries. Finally, any assistance provided by non-governmental organizations, such as the IMF and the World Bank, should also emphasize institutional reform. (C) 2004 Elsevier Inc. All rights reserved.

Publication Title

Journal of World Business

Volume

39

Issue

3

First Page

233

Last Page

243

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