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FDI, international business and regulation: The behaviour of UK multinational corporations.

Smith-Hillman, A Vindelyn and Omar, Maktoba (2005) FDI, international business and regulation: The behaviour of UK multinational corporations. European Business Review, 17 (1). pp. 69-82. ISSN 0955 534X

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Abstract/Description

Purpose - Multinational corporations (MNCs) occupy a central role within the process of globalisation as evidenced through global foreign direct investment (FDI) inflows valued at US$3.1 trillion by the end of 2000. The importance of regulation is evident through the significant growth in global regulatory changes throughout the 1990s.The influence of regulation on UK firms' international investment decisions is assessed. Design/methodology/approach - Econometric analysis measures the influence of regulation and political risk on 121 UK firms with international operations. Host countries are divided into developed and less developed regions based on the World Bank country classification. Data derive from questionnaires that cover the period 1994-1996 and include information on host country features of two economically and culturally different countries in which firms have ongoing overseas operations. Findings - The findings indicate that regulation is a statistically significant, and positive, factor influencing internationally mobile FDI. There are however, regional differences between less developed and developed economies. Proportionately smaller FDI inflows to less developed economies partially reflect MNCs' response to weak governance and the regional predisposition towards corrupt practices. Originality/value - Hitherto international business has been able to avoid the regulatory reach as one of the perks of being an international player. The prospect for long-term avoidance is of a more limited time-frame as sovereign status does not exempt a country from international intervention. As countries adopt a united approach to regulation, avoidance becomes less of an issue and may be replaced by more critical evaluation of different types of regulation. [math mode missing closing $]

Item Type: Article
Print ISSN: 0955 534X
Electronic ISSN: 1758-7107
Uncontrolled Keywords: international investments; multinational companies; globalization; FDI; foreign direct investment;
University Divisions/Research Centres: The Business School > School of Marketing, Tourism and Languages
Dewey Decimal Subjects: 300 Social sciences > 330 Economics > 338 Production
300 Social sciences > 330 Economics > 332 Financial economics
Library of Congress Subjects: H Social Sciences > HG Finance
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Item ID: 2086
Depositing User: RAE Import
Date Deposited: 18 Feb 2008 11:16
Last Modified: 25 Apr 2013 16:13
URI: http://researchrepository.napier.ac.uk/id/eprint/2086

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