Outbound Foreign Direct Investment (FDI) Motivation and Domestic Employment by Multinational Enterprises (MNEs)

Hong, Eunsuk; Lee, In Hyeock; Makino, Shige

Abstract

This study investigates whether and how outbound foreign direct investment (FDI) boosts or reduces domestic employment by multinational enterprises (MNEs). Based on analyses of a firm-level sample of 18,252 subsidiary-year cases of Japanese MNEs in 59 countries from 1996 to 2010, the findings indicate that outbound FDI motivated by (1) market seeking for scale and scope expansion, (2) natural resource seeking, or (3) strategic asset seeking tends to serve as a “strategic complement” that enhances domestic employment by MNEs. However, outbound FDI motivated by (4) market seeking associated with declines in domestic demand or (5) labor resource seeking tends to act as a “strategic substitute” that reduces domestic employment by MNEs. The implications for theory, practice, and policymaking are discussed.

Citation

Hong, E., Lee, I. H., & Makino, S. (2019). Outbound Foreign Direct Investment (FDI) Motivation and Domestic Employment by Multinational Enterprises (MNEs). Journal of International Management, 25(2), Article 100657. https://doi.org/10.1016/j.intman.2018.11.003

• Journal Article Type: Article
• Acceptance Date: Nov 25, 2018
• Online Publication Date: Dec 13, 2018
• Publication Date: Jun 1, 2019
• Deposit Date: Dec 4, 2018
• Publicly Available Date: Dec 4, 2018
• Journal: Journal of International Management
• Print ISSN: 1075-4253
• Electronic ISSN: 1873-0620
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 25
• Issue: 2
• Article Number: 100657
• DOI: https://doi.org/10.1016/j.intman.2018.11.003
• Keywords: Outbound FDI, domestic employment, strategic substitute, strategic complement, FDI motivations, Japanese MNEs