The effect of non-conventional outbound foreign direct investment (FDI) on the domestic employment of multinational enterprises (MNEs)

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Main author: Lee, In Hyeock (Ian)
Other authors: Hong, Eunsuk
Makino, Shige
Format: Journal Article           
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id eprints-32447
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
description Using a sample of 787 Japanese MNEs operating in 60 countries from 1996 to 2010, this study examines the impacts of MNEs’ three most commonly observed forms of non-conventional outbound FDI (i.e., as a means to counter trade barriers, to achieve a financial hedge, or to obtain tax breaks) on domestic employment levels of MNEs at home. We build on a conceptual classification of ‘motivation-activity’ of MNEs as a theoretical framework, and evaluate the impacts of MNEs’ non-conventional outbound FDI on their domestic employment levels in relation to the MNEs’ specific combination of ‘motivation’ and ‘activity’ as they conduct outbound FDI in host countries. The 3SLS regression results show strong evidence that non-conventional outbound FDI in core business activities reduces MNEs’ domestic employment levels when the investment is primarily for responding to country-specific conditions, such as circumventing host country restrictions (e.g., FDI to counter trade barriers) or escaping from home country restrictions (e.g., FDI for tax incentive packages), while FDI in non-core business activities (e.g., FDI for financial hedging or FDI in tax havens) has either a positive or insignificant effect on MNEs’ domestic employment levels depending on whether it aims to develop FSAs or not. We conclude the study with public policy implications from these findings.
format Journal Article
author Lee, In Hyeock (Ian)
author_facet Lee, In Hyeock (Ian)
Hong, Eunsuk
Makino, Shige
authorStr Lee, In Hyeock (Ian)
author_letter Lee, In Hyeock (Ian)
author2 Hong, Eunsuk
Makino, Shige
author2Str Hong, Eunsuk
Makino, Shige
title The effect of non-conventional outbound foreign direct investment (FDI) on the domestic employment of multinational enterprises (MNEs)
publisher Elsevier
publishDate 2020
url https://eprints.soas.ac.uk/32447/

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