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We suggest that the entire world may not always be the appropriate frame of reference in analyses of Multinational Enterprises (MNEs) location choices. In some industries and activities, more narrowly defined geographic areas, such as regions and cities, are more relevant level of analyses. Employing global cities as the geographic frame of reference, we extend the theory of the location choices of MNEs by challenging the assumption that location attributes have identical values for all MNEs. Rather, we explicitly acknowledge the relative value of such attributes for individual MNEs, and search for the firm-specific characteristics that affect this variation. The empirical testing is based on analysis of 673 financial and professional service MNEs that entered New York and London via mergers and acquisitions (M&As). The findings confirm that it is the interaction between location and firm-specific attributes, rather than each of these independently, which affects location choices.

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.

Outward foreign direct investment (FDI) from emerging economies, in particular from China and India, is on the rise. As a result, the international expansion of emerging-market multinational enterprises (MNEs) is attracting growing attention among scholars. However, existing research comparing the location patterns of Chinese and Indian MNEs is still scant. In order to fill this gap, we aim to analyze the impact of political risk and cultural distance on the location choice of Chinese and Indian MNEs. Drawing on an institutional approach, we propose several hypotheses regarding the influence of political risk and cultural distance on location decisions. We test our hypotheses using a sample of FDIs carried out by Chinese and Indian MNEs. Our findings suggest that the behavior of Chinese MNEs is less conventional than that of their Indian counterparts when facing institutional obstacles in host countries. Previous papers dealing with location decisions of China’s and India’s outward FDI did not specifically address the impact of political risk and cultural distance. This comparative study provides new empirical evidence on the influence of these traditional host country institutional factors.

Purpose – The purpose of this chapter is to provide a comprehensive review of the literature on the importance of taxes as a determinant of FDI attraction.

Approach – The chapter presents the fundamental elements of the conceptual background that explain how and under which circumstances taxation may be a significant factor underlying FDI decisions. Then it proceeds with an extensive review of the qualitative and quantitative literature on the topic. Finally, it draws several relevant conclusions on the main patterns that can be extracted from the evolution of the literature on this field.

Findings – In this chapter we arrive at three major findings concerning the effect of taxes on FDI, and we uncover one interesting puzzle worthy of further research.

First, from the literature review it becomes clear that both FDI and taxes are concepts covering heterogeneous phenomena, and therefore to compare studies, results or to make judgments on the relationship between taxes and FDI, the working definitions of FDI and taxes that are being used needs to be clearly established and understood.

Second, based on the review of the qualitative literature, it becomes clear that while taxes are an important aspect of FDI decisions among managers, they are probably not the main driver of the decision. Moreover, taxes may only play a ‘marginal’ role compared with other determinants of FDI.

Third, looking carefully at the quantitative literature as a whole, there is not a straight answer that permits to unequivocally say that lower taxes increase FDI attraction.

Finally, a puzzle emerges from the tension between what policy makers believe and what the studies show. The review in this chapter puts in evidence that while policy makers believe lowering taxes increases the attractiveness of their territories vis-à-vis FDI, the facts show that taxes appear only to play a marginal role compared with other determinants of FDI. So, why do policy makers put so much faith on tax policies as an FDI attraction tool?

Value – The value of this chapter is threefold. It presents a very complete and up to date review of the literature concerning the impact of taxation on FDI decisions, it analyses the literature's apparently disparate results and groups them into three clear emerging conclusions, and uncovers an interesting public policy puzzle.

This paper applies the mixed logit and the latent class models to analyse the heterogeneity in foreign investment location choices in Central and Eastern Europe. The empirical results show that the responsiveness of the probabilities of choices to invest in a particular location to country-level variables differs both across sectors and across firms of different characteristics. The paper highlights the superiority of the latent class model with regards to the model fit and the interpretation of results.

The chapter (re)assesses the impact of the 2008 financial crisis on global foreign direct investment (FDI). Based on updated data and renewed analyses, the author explores the crisis’ overall effects on global FDI flows, the different consequences on developed and developing countries, and the subsequent rise of emerging economies as both recipients and sources of FDI. Implications for policy and international business theory are delineated. By so doing, the author extends the theoretical and empirical studies on FDI determinants to the global level and provides lessons that are particularly useful against the backdrop of the COVID-19 pandemic.

This paper tests the pollution haven hypothesis by examining the relationship between environmental regulation and foreign investment with consideration of the role of corporate social responsibility, which has so far been neglected. Using multinationals’ investment data from China, our results in general support the pollution haven hypothesis that less stringent environmental regulation is more attractive for multinationals to invest in China, but high social responsibility can counteract attractiveness of weak environmental regulation.

We examine the determinants of a current migrant's location choice emphasizing the relative importance and interaction of migrant stocks and flows. We show that both stocks and flow have significant impacts on the migrant's decision of where to locate. The significance and size of the effects vary according to legal status and whether the migrant is a “new” or a “repeat” migrant.