The Role of Parent-Firm Characteristics in Affiliate Activities in South Korean Foreign Direct Investment

Hongshik Lee and Soonhyung Sim

Emerging Markets Finance and Trade, 2015, vol. 51, issue S4, S11-S22

Abstract: We examine the role of parent-firm characteristics in affiliate activities, including local sales, exports to Korea, and exports to third countries. We find that parent-firm characteristics apparently affect the selling behaviors of affiliates. First, affiliate local sales increase with higher research and development (R&D) intensity and capital intensity but with lower parent wages. Affiliate exports to Korea decrease with higher capital intensity and lower wages, and affiliate exports to third countries rise with higher R&D intensity. We also analyze the extent to which affiliate activities are influenced by country and industry characteristics, and the results coincide with those of conventional motivations for foreign direct investment (FDI).

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:51:y:2015:i:s4:p:s11-s22

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DOI: 10.1080/1540496X.2015.1026711

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