Person: Blake, Daniel J.
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Daniel J.
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Blake
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IE University
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IE Business School
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Strategy
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Publication The Conditional Nature of Political Risk: How Home Institutions Influence the Location of Foreign Direct Investment(Wiley, 2018-03-14) Beazer, Quintin; Blake, Daniel J.; Spanish Ministry of Economics and Competitiveness; https://ror.org/02jjdwm75What determines whether countries' institutions attract or deter investment? Although existing theories predict that multinational enterprises (MNEs) avoid locations where institutions cannot constrain public and private actors' opportunistic behavior, we argue host institutions' attractiveness depends on firms' home environment. Home country institutions shape firms' practices and capabilities, thus helping to determine the environments that firms are best prepared to face abroad. We test our predictions using multiple data sets at different levels of analysis: firm-level data on MNEs' foreign subsidiaries, data on bilateral foreign direct investment (FDI) positions, and longitudinal data on bilateral FDI flows. We find that states with independent judiciaries are particularly attractive to investment from countries also possessing independent courts. Similarly, countries with low judicial independence disproportionately send FDI to countries lacking independent judiciaries. These findings' implications challenge conventional wisdom: “Good” institutions may not attract all investors, and “bad” institutions may not always deter, as current research suggests.Publication Risk Is Relative: Heterogeneous Responses to Institutional Risks for Foreign Investment(Oxford University Press, 2021) Beazer, Quintin; Blake, Daniel J.; https://ror.org/02jjdwm75Are economic actors equally sensitive to institutional conditions? While existing research recognizes that institutions can have varying effects on actors' interests,the implicit assumption is that actors are homogeneous in how sensitive they are to their institutional environment. We investigate this assumption in the context of foreign direct investment,arguing that actors from countries with weaker institutions will be less affected by information about host country institutional conditions-both good and bad. We test this argument using survey data from a diverse group of managers-in-training at an international business school. We find that when asked to evaluate a potential foreign investment location,respondents from developing countries are significantly less sensitive to information about the host country's courts than their counterparts from developed economies. In contrast,we find that economic actors from both developed and developing countries respond similarly to information about the stability of economic policies. The findings suggest that sensitivity to the risks and safeguards of certain institutional conditions vary systematically across actors,depending on both the home environment to which economic actors have been exposed and the type of host institution. © 2021 The Author. Published by Oxford University Press on behalf of the International Studies Association.