Does national sentiment affect foreign direct investment, and if so, how? Additional evidence

Megan Yuan Li, Shige Makino and Chunyan Jiang

International Business Review, 2019, vol. 28, issue 5, -

Abstract: Studies of foreign direct investment (FDI) decisions typically assume that decision makers and stakeholders act rationally. Drawing on studies conducted at the individual level, this study focuses instead on affect and explores theoretically and empirically how national sentiment influences FDI decisions. In particular, we develop a typology for understanding national sentiment along two axes—positive versus negative and accumulated versus transient—and investigate their separate influences on FDI. The results indicate that negative sentiment has a greater influence on FDI than positive sentiment and that accumulated sentiment has a greater influence than transient sentiment. This study complements conventional FDI research by demonstrating that national sentiment offers additional explanatory power beyond the variables known to influence FDI decisions. Moreover, our study shows that research conducted at the individual level can be useful for understanding the influence of affective elements on FDI decisions.

Keywords: National sentiment; Foreign direct investment; Japan; Panel data (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:28:y:2019:i:5:4

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DOI: 10.1016/j.ibusrev.2019.101586

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