The effect of non-conventional outbound foreign direct investment (FDI) on the domestic employment of multinational enterprises (MNEs)

Using a sample of 787 Japanese MNEs operating in 60 countries from 1996 to 2010, this study examines the impacts of MNEs’ three most commonly observed forms of non-conventional outbound FDI (i.e., as a means to counter trade barriers, to achieve a financial hedge, or to obtain tax breaks) on domestic employment levels of MNEs at home. We build on a conceptual classification of ‘motivation-activity’ of MNEs as a theoretical framework, and evaluate the impacts of MNEs’ non-conventional outbound FDI on their domestic employment levels in relation to the MNEs’ specific combination of ‘motivation’ and ‘activity’ as they conduct outbound FDI in host countries. The 3SLS regression results show strong evidence that non-conventional outbound FDI in core business activities reduces MNEs’ domestic employment levels when the investment is primarily for responding to country-specific conditions, such as circumventing host country restrictions (e.g., FDI to counter trade barriers) or escaping from home country restrictions (e.g., FDI for tax incentive packages), while FDI in non-core business activities (e.g., FDI for financial hedging or FDI in tax havens) has either a positive or insignificant effect on MNEs’ domestic employment levels depending on whether it aims to develop FSAs or not. We conclude the study with public policy implications from these findings

Multinational enterprises, intra-regional cross-border M and As, and performance: Location advantages of market versus knowledge

Building on the theories of internalization and regional MNEs and using a sample of 11,098 cross-border M&As in 1997–2017, this study investigates performance implications of MNEs’ cross-border M&As aimed to locate overseas market potential versus knowledge endowment, in terms of intra-regional vis-à-vis inter-regional M&As. The main findings from this study are threefold: (1) Intra-regional cross-border M&As’ positive effects on their completion and post-merger operating performance are location advantage-specific phenomena; (2) When cross-border M&As are geared towards those foreign countries of strong market potential, intra-regional cross-border M&As are more likely to be completed, and followed by better post-merger operating performance of the acquirers than their inter-regional counterparts; and (3) When cross-border M&As are targeted towards those foreign countries endowed with sophisticated knowledge, intra-regional cross-border M&As are less likely to be completed, and do not seem to help the acquirers achieve better post-merger operating performance, compared to their inter-regional counterparts. The study concludes with important theoretical, practical, and public policy implications