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Who Goes Where and How? Firm Heterogeneity in the Choice of FDI Type and Location

Jung Hur () and Hea-Jung Hyun

No 1105, Working Papers from Research Institute for Market Economy, Sogang University

Abstract: This paper examines the role of firm heterogeneity in the choice made by multinationals with regards to FDI type and location. Using Korean firm-level data, we find that highly productive firms are more likely than their less efficient counterparts to invest in tough markets and choose combined FDI strategy against either horizontal FDI or vertical FDI across different host countries. These findings, consistent with the recent theories in international economics, suggest that firm heterogeneity may play a significant role in FDI strategy as well as location decision.

Keywords: Foreign Direct Investment; Multinationals; Horizontal Investment; Vertical Investment; Firm Heterogeneity; Location Decision (search for similar items in EconPapers)
JEL-codes: F23 D22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-int
Date: 2011-08
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