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The Conditional Nature of Political Risk: How Home Institutions Influence the Location of Foreign Direct Investment

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dc.contributor.authorBeazer, Quintin
dc.contributor.authorBlake, Daniel J.
dc.contributor.funderSpanish Ministry of Economics and Competitiveness
dc.contributor.rorhttps://ror.org/02jjdwm75
dc.date.accessioned2025-01-29T16:04:36Z
dc.date.available2025-01-29T16:04:36Z
dc.date.issued2018-03-14
dc.description.abstractWhat 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.
dc.description.peerreviewedyes
dc.description.statusPublished
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dc.identifier.citationBeazer, Q. H., & Blake, D. J. (2018). The conditional nature of political risk: How home institutions influence the location of foreign direct investment. American Journal of Political Science, 62(2), 470-485. https://doi.org/10.1111/ajps.12344
dc.identifier.doihttps://doi.org/10.1111/ajps.12344
dc.identifier.issn1540-5907
dc.identifier.urihttps://hdl.handle.net/20.500.14417/3503
dc.issue.number2
dc.journal.titleAmerican Journal of Political Science
dc.language.isoen
dc.page.final485
dc.page.initial470
dc.page.total15
dc.publisherWiley
dc.relation.departmentStrategy
dc.relation.entityIE University
dc.relation.projectIDCSO2012-39804
dc.relation.schoolIE Business School
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.accessRightsinfo:eu-repo/semantics/openAccess
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/deed.en
dc.titleThe Conditional Nature of Political Risk: How Home Institutions Influence the Location of Foreign Direct Investment
dc.typeinfo:eu-repo/semantics/article
dc.version.typeinfo:eu-repo/semantics/acceptedVersion
dc.volume.number62
dspace.entity.typePublication
relation.isAuthorOfPublication3e43dfda-4510-4887-b8d5-72900cba7590
relation.isAuthorOfPublication.latestForDiscovery3e43dfda-4510-4887-b8d5-72900cba7590
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