Exploring South Korean Foreign Direct Investment Motives and State-Level Location Decisions: US Evidence 1995-2008

Abstract

This study uses a novel application of panel fuzzy-set qualitative comparative analysis (fsQCA) in the international management field. utilizing a unique database capturing reasons for foreign direct investment (FDI), and state-level location, we explain location decisions of high-technology South Korean (henceforth Korean) multinational enterprises (MNEs), when first entering the United States of America (henceforth US), from 1995 until the 2008 financial crisis. Various home country conditions, combined with a desire for technological upgrading, encouraged firms to seek locational advantages. Additionally, rather than assuming FDI to be driven by a single purpose over time, the addition of regional characteristics allows a typology of reasons for Korean FDI to be developed. We show evolving Korean FDI trends in the US with home country and regional perspectives interacting to attract FDI into US states with different characteristics, arguing this is consistent with US policy seeking to attract inward investment to foster economic development