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The chapter adopts the international production typology offered by the OLI paradigm whereby firms are classified principally as market seekers, efficiency seekers, natural resource seekers or partner seekers. These motives to reach overseas are tested against 26 location factors, categorised under ‘business climate’, ‘market conditions’, ‘local resources’ and ‘incentive packages’, and three sets of control variables: industry, age and entry mode. The empirical analysis based on firm-level data from 15 sub-Saharan countries shows that, for all types of firm, the presence of local markets, regional markets and key clients are the positive determining location factors, followed by business climate factors, such as labour costs, the availability of skilled labour, raw materials and local suppliers. For market-seeking MNEs, the political and economic stability, infrastructure, country's legal framework and the transparency of investment all rate high. Importantly, the implication for host-nation promotion agencies is that once the motive to enter their economies is clear, they can – and should – play a skilful negotiation game with MNEs at the entry point itself. Based on the empirical analysis, a conceptual two-step approach to understanding FDI decisions, intimately linked to the liability of foreignness concept, is suggested.

Ruth V. Aguilera is an associate professor and a Fellow at the Center for Professional Responsibility for Business and Society at the College of Business at the University of Illinois at Urbana-Champaign. She also holds courtesy appointments at the School of Labor and Employment Relations, the College of Law and the Department of Sociology at Illinois. She received MA and PhD degrees in Sociology from Harvard University. Her research interests fall at the intersection of economic sociology and international business, specifically in the fields of comparative corporate governance, foreign location choices and corporate social responsibility. She has published in the leading journals in International Business and Management. Dr. Aguilera currently serves as a member of an associate editor of Corporate Governance: International Review and is a member of the Editorial Boards of the following peer reviewed top tier journals: Academy of Management Perspectives, Global Strategy Journal, Journal of International Business Studies, Journal of Management Studies, Management International Review, Organization Studies and Strategic Management Journal. She also serves in the board of IMDEA Social Sciences (Madrid) and CSR IMPACT Project (Brussels).