Injecting demand through spillovers: Foreign direct investment, domestic socio-political conditions, and host-country entrepreneurial activity

Phillip H. Kim and Mingxiang Li

Journal of Business Venturing, 2014, vol. 29, issue 2, 210-231

Abstract: This study examines how foreign direct investment (FDI) spurs entrepreneurial activity in host countries. We also investigate why this relationship varies across countries because of domestic socio-political conditions. The findings from our panel analyses of 104 countries from 2000 to 2009 are consistent with our predictions that foreign direct investment positively relates to business creation and this positive effect is strongest in countries with poor institutional support, weak political stability, and low general human capital. Our work provides new insights into how cross-border investments and domestic socio-political conditions jointly influence entrepreneurial activity, especially in emerging and developing economies.

Keywords: Foreign direct investment; New firm creation; Institutional support; Political stability; General human capital (search for similar items in EconPapers)
JEL-codes: F23 L26 M13 O17 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:29:y:2014:i:2:p:210-231

DOI: 10.1016/j.jbusvent.2012.10.004

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