Outward foreign direct investment (OFDI) is often assumed to shift jobs abroad, yet evidence on its effects on firms’ domestic employment remains mixed. We argue that part of this variation can be explained by the organizational capacity constraints firms face when expanding internationally. Drawing on a Penrosean capacity-constraint perspective, we examine how the size of OFDI projects relative to firm size shapes domestic employment outcomes. Analyzing OFDIs by multinational enterprises from 13 emerging market economies, we find that the effect of OFDI on domestic employment strengthens at higher values of that relative size. This pattern reflects organizational capacity constraints at home, which become salient when firms undertake relatively large foreign expansion projects and require additional hiring. We also show that this relationship is moderated by establishment mode, state ownership, and regional orientation. The results suggest that not all OFDI projects yield the same domestic employment outcomes, highlighting the importance of firm-specific organizational constraints. OFDI projects representing approximately 10

Country risk is an important determinant for foreign direct investment (FDI) decisions. Over the lifetime of an FDI project, country risk can change due to political, social, or economic events in a country. However, how changing country risk influences FDI decisions has not been fully investigated. Therefore, the goal of this study is to provide a theoretical conceptualization of how dynamic risk developments affect FDI. We follow a financial theoretical perspective and base our propositions on discounted cash-flow models. We propose that a positive trend in country risk, where country risk is expected to decrease over time, increases FDI probability. What is more, we propose that predictability of this trend positively moderates this effect, but that high amplitude and high frequency in risk changes reduce the positive effect of a positive trend on FDI. Finally, our theoretical model proposes that firms of different size can manage dynamic risk developments differently: large firms can better deal with high-amplitude changes, whereas small firms can better deal with high frequency changes in country risk. With this study, we want to contribute to a better understanding of how dynamic environments influence investment decisions and introduce a long-term perspective of country risk.

Research to date has only rarely studied firm-specific reasons that influence how multinational enterprises grow employment in their home country after they make a foreign direct investment (FDI). We apply a Penrosean perspective to understand post-investment coordination challenges and develop novel theory about the domestic employment effects of the FDI’s relative size. Specifically, we argue that MNEs’ home-country employment growth is greater for relatively larger projects because of constraints in human resources who can attend to an increased amount of coordination challenges. Further, we suggest that MNEs’ establishment-mode choice, their regional orientation, and their degree of state ownership co-shape that relationship. We find support for our hypotheses analyzing 409 projects by MNEs from 13 countries.

In this study, we investigate how populist governments influence the location choice of multinational enterprises (MNEs) in terms of foreign direct investment (FDI). We also examine how experience of MNEs acts as a contingency in this relationship. With a sample of 525,688 observations on FDIs from 2007 to 2019 we find that MNEs are less likely to invest in a country the more its government is considered populist. More internationally experienced firms that already have invested in the target country and that have experience with populist governments are less deterred from uncertainties of populist governments. Overall, our results highlight the specific uncertainties populist governments cause for MNEs’ location choice and that experienced MNEs can better deal with them.

External dynamics have the potential of unforeseeably and drastically changing market conditions and bear great risks and uncertainty. In this case study on the Arab Spring, we explore the effects of external dynamics on institutional duality, i.e., institutional pressures that foreign subsidiaries are confronted with through headquarters (internal) and host country environments (external). Based on an analysis of a European water boiler manufacturer with a production site in Egypt, we analyze institutional pressures before and during the Arab Spring as well as foreign subsidiary and MNE HQ reactions to changed external pressures. We find that external pressures and uncertainty increase in a situation of external dynamics, leading to higher internal pressures. However, MNE HQs decrease internal pressures exerted on subsidiaries if HQs trust subsidiary control mechanisms. Moreover, subsidiaries can influence internal pressures by constructing their internal legitimacy. Our observation of a direct relationship between external and internal pressures and of subsidiary and HQ responses to institutional duality in a dynamic environment represent important contributions to institutional duality literature.

In recent years, sentiments have been shifting towards nationalist attitudes and increasing anti-foreigner sentiments. Such sentiments can spill over to MNCs given MNCs’ embeddedness in their home-...

Migrants are able to provide firms with knowledge about their country of origin. This can become a valuable source of knowledge for firms in the process of internationalization. Relating to a Knowledge-Based-View perspective, this paper explains how the resource commitment of firms to foreign countries is contingent on immigration from those countries: Immigrants’ country knowledge reduces uncertainty and makes the governance of foreign operations more efficient. Moreover, this paper connects the relevance of knowledge for firm internationalization to institutional characteristics in immigrants’ home and host countries, both of which policymakers can shape. We test predictions on more than 13,000 observations over a 14-year period (2003–2016). The paper identifies economically significant contingencies of a positive effect of immigration, which are robust to changes in model specification, measurement, and sampling. The results indicate how immigration can shape firms’ investments abroad and have implications for developing policy as well as international business theory.