Foreign-origin managers and FDI location choice

Massimiliano Coda Zabetta, Ernest Miguelez, Francesco Lissoni and Sarah Hegarty
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Massimiliano Coda Zabetta: BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Ernest Miguelez: BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Sarah Hegarty: Swinburne University of Technology [Melbourne]

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Abstract: Building upon the upper echelons theory of organizations as applied to internationalization strategies, we investigate the impact of foreign-origin top management team (TMT) members on their companies' location choice. We propose that a manager-from-target effect may exist, by which a manager's knowledge of their country of origin increases the likelihood of choosing that country as a target. We expect it to be stronger for acquisitions than for greenfield investments, the inputs of foreign-origin managers being more relevant in the first case. Based on a large sample of foreign direct investment from 2013 to 2019, and using name analysis to identify TMT members' origins, we find that the effect is present in both establishment modes but larger and more robust for acquisitions. It is also larger in companies with less diverse TMTs, for which targeting one manager's country of origin instead of others' may be less likely to cause conflict. Future research should explore whether investments in locations suggested by managers from the target country outperform others. If this is the case, it implies that recruiting foreign-origin top managers can improve a company's internationalization strategy via better location choices.

Keywords: Foreign direct investment; Location choice; International migration (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-int
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Published in Journal of International Business Studies, 2025, 56 (2), pp.194-202. ⟨10.1057/s41267-024-00726-2⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04783226

DOI: 10.1057/s41267-024-00726-2

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