Beauty in the Eyes of the Beholders: How Government- and Consumer-Based Country-of-Origin Advantages and Disadvantages Drive Host Country Investment Dynamics

Alvaro Cuervo-Cazurra () and C. Annique Un ()
Additional contact information
Alvaro Cuervo-Cazurra: Northeastern University
C. Annique Un: Northeastern University

Management International Review, 2023, vol. 63, issue 2, No 3, 285-312

Abstract: Abstract Building on the resource-based view, we propose conceptualizing a foreign multinational’s country of origin as a resource, an asset tied semi-permanently to the firm, and analyze how this resource affects its host country investments. We argue that the country of origin provides an advantage or disadvantage in the host country depending on its positive or negative view among the host-country government and consumers. This results in four alternative configurations of host country investment dynamics based on the alignment of their views. First, when a multinational’s country of origin generates a government-based advantage and a consumer-based disadvantage, the multinational is more likely to make larger initial investments to benefit from incentives and larger subsequent localization investments to disassociate itself from the country of origin. Second, when the country of origin creates a government-based disadvantage and a consumer-based advantage, the foreign firm is more likely to make smaller initial and subsequent investments to maintain its association with the country of origin. Third, when the country of origin leads to government-based and consumer-based advantages, the foreign multinational is more likely to make a large initial investment to benefit from government incentives and smaller subsequent investments to maintain its association with the country of origin. Finally, when the country of origin leads to government-based and consumer-based disadvantages, the foreign multinational is more likely to make smaller initial investments to minimize risk and larger subsequent investments to localize.

Keywords: Advantage; Disadvantage; Country-of-origin; Foreign investment; Resource-based view (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11575-022-00497-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:manint:v:63:y:2023:i:2:d:10.1007_s11575-022-00497-8

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/11575

DOI: 10.1007/s11575-022-00497-8

Access Statistics for this article

Management International Review is currently edited by Michael-Jörg Oesterle and Joachim Wolf

More articles in Management International Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().