What Does Location Choice Reveal About Knowledge-Seeking Strategies of Emerging Market Multinationals in the EU?

Björn Jindra, Sohaib S. Hassan, Uwe Cantner

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    The European Union is one of the largest recipients of outward foreign direct investment from emerging economies. We apply different discrete choice models to analyze the location choice of 4555 emerging market firms in 93 sub-national regions of the European Union. In particular, we test to what extent these firms’ location choices are related to agglomeration economies and knowledge externalities, because these have been suggested as potential sources to propel learning and technological catching-up. Our results indicate that emerging market firms’ location choices are positively affected by agglomeration economies and knowledge externalities. In addition, we can identify differences in the valuation of various sub-national location factors as well as differences in the substitution pattern between alternative regions for firms originating from emerging markets. The evidence supports the argument that emerging market firms use outward foreign direct investment to augment ownership specific assets.
    The European Union is one of the largest recipients of outward foreign direct investment from emerging economies. We apply different discrete choice models to analyze the location choice of 4555 emerging market firms in 93 sub-national regions of the European Union. In particular, we test to what extent these firms’ location choices are related to agglomeration economies and knowledge externalities, because these have been suggested as potential sources to propel learning and technological catching-up. Our results indicate that emerging market firms’ location choices are positively affected by agglomeration economies and knowledge externalities. In addition, we can identify differences in the valuation of various sub-national location factors as well as differences in the substitution pattern between alternative regions for firms originating from emerging markets. The evidence supports the argument that emerging market firms use outward foreign direct investment to augment ownership specific assets.
    LanguageEnglish
    JournalInternational Business Review
    Volume25
    Issue number1, Part A
    Pages204-220
    Number of pages17
    ISSN0969-5931
    DOIs
    StatePublished - 2016

    Keywords

    • Emerging economies
    • European Union
    • Location choice
    • Outward FDI

    Cite this

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    title = "What Does Location Choice Reveal About Knowledge-Seeking Strategies of Emerging Market Multinationals in the EU?",
    abstract = "The European Union is one of the largest recipients of outward foreign direct investment from emerging economies. We apply different discrete choice models to analyze the location choice of 4555 emerging market firms in 93 sub-national regions of the European Union. In particular, we test to what extent these firms’ location choices are related to agglomeration economies and knowledge externalities, because these have been suggested as potential sources to propel learning and technological catching-up. Our results indicate that emerging market firms’ location choices are positively affected by agglomeration economies and knowledge externalities. In addition, we can identify differences in the valuation of various sub-national location factors as well as differences in the substitution pattern between alternative regions for firms originating from emerging markets. The evidence supports the argument that emerging market firms use outward foreign direct investment to augment ownership specific assets.",
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    What Does Location Choice Reveal About Knowledge-Seeking Strategies of Emerging Market Multinationals in the EU? / Jindra, Björn ; Hassan, Sohaib S.; Cantner, Uwe.

    In: International Business Review, Vol. 25, No. 1, Part A, 2016, p. 204-220.

    Research output: Contribution to journalJournal articleResearchpeer-review

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