History Matters: Colonial-Based Connectivity and Foreign Headquarter Location Choice

Ana Botella Andreu () and Katiuscia Lavoratori ()
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Ana Botella Andreu: University of Valencia
Katiuscia Lavoratori: University of Reading

Management International Review, 2022, vol. 62, issue 5, No 3, 739 pages

Abstract: Abstract In this study, we argue that European countries’ extensive relationships with former colonies represent a location factor that attracts foreign headquarter investments. The strategic role of foreign headquarters as coordinators, opportunity detectors, and global bridgeheads makes the location choice of headquarter activities sensitive to historical-based institutional connections. Drawing on a sample of 2230 foreign headquarter investments in Europe, we find that the stronger the combined effect of historical connections and current economic relationships with former colonies, the higher the probability of attracting headquarter investment projects. We refer to this combined characteristic as colonial-based connectivity. The study findings support the hypothesis that past colonial relationships and historical context influence FDI decisions and location preferences. We contribute to the literature by advancing the understanding of foreign headquarter location choices, and by demonstrating the importance of historical context in international business research. We emphasize how the former colonial influence continues to confer advantages upon some countries, including the attraction of FDI.

Keywords: Foreign headquarters; Location choice; Foreign direct investment; Colonial links; Institutions; Intermediate headquarters (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11575-022-00481-2

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