[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/35119.html
   My bibliography  Save this paper

Inward FDI and firm-specific advantages of Indian manufacturing industries

Author

Listed:
  • Mishra, Bikash Ranjan
Abstract
The unprecedented growth of international productions and Foreign Direct Investment (FDI) flows over the last two decades has led to the upsurge in scientific investigation into the distinctive facets of FDI. Despite the considerable amount of research undertaken, it seems that there is very little comprehensive economic analysis of FDI flows with respect to Indian firms. The present study attempts to bridge this gap by answering the following research question: what are the micro-level causes of FDI inflow, i.e. what are the determinants or pull factors of FDI inflow into Indian domestic firms? In order to analyze this question the study uses a panel data structure constructed over the recent 5 years, ranging from 2006 to 2010 and covering 22 sectors in Indian Manufacturing Industries. Adoption of Fixed and Random effects estimation procedure help to identify that among a set of firm-specific factors, only technological intensity, both in-house and import along with product differentiation have negatively contributed for foreign investors’ shareholding of local firms. The export performance, age, asset size and sales volume are among other remaining firm-specific characteristics which lack effective pulling effects in attracting FDI.

Suggested Citation

  • Mishra, Bikash Ranjan, 2011. "Inward FDI and firm-specific advantages of Indian manufacturing industries," MPRA Paper 35119, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35119
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/35119/1/MPRA_paper_35119.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lenn Gomes & Kannan Ramaswamy, 1999. "An Empirical Examination of the Form of the Relationship Between Multinationality and Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 173-187, March.
    2. Horst, Thomas, 1972. "Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 258-266, August.
    3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. Daniel Sullivan, 1994. "Measuring the Degree of Internationalization of a Firm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(2), pages 325-342, June.
    5. Gatignon, Hubert & Anderson, Erin, 1988. "The Multinational Corporation's Degree of Control over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 305-336, Fall.
    6. R. D. Pearce, 1993. "The Growth and Evolution of Multinational Enterprise," Books, Edward Elgar Publishing, number 353.
    7. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
    8. Lall, Sanjaya & Siddharthan, N S, 1982. "The Monopolistic Advantages of Multinationals: Lessons from Foreign Investment in the U.S," Economic Journal, Royal Economic Society, vol. 92(367), pages 668-683, September.
    9. John H Dunning, 1980. "Towards an Eclectic Theory of International Production: Some Empirical Tests," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(1), pages 9-31, March.
    10. Charles P. Kindleberger, 1984. "Multinational Excursions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611996, April.
    11. Chwo-Ming J Yu & Kiyohiko Ito, 1988. "Oligopolistic Reaction and Foreign Direct Investment: The Case of the U.S. Tire and Textiles Industries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 449-460, September.
    12. Dunning, John H, 1979. "Explaining Changing Patterns of International Production: In Defence of the Eclectic Theory," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 269-295, November.
    13. Blomstrom, Magnus & Lipsey, Robert E., 1986. "Firm Size and Foreign Direct Investment," Working Papers 86-34, C.V. Starr Center for Applied Economics, New York University.
    14. Kumar, Nagesh, 1990. "Mobility Barriers and Profitability of Multinational and Local Enterprises in Indian Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 449-463, June.
    15. Louis T. Wells, 1983. "Third World Multinationals: The Rise of Foreign Investments from Developing Countries," MIT Press Books, The MIT Press, edition 1, volume 1, number 026273169x, April.
    16. Peter J. Buckley & Mark Casson, 1991. "The Future of the Multinational Enterprise," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-21204-0, October.
    17. Edward K. Y. Chen, 1983. "Multinational Corporations, Technology and Employment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-06106-8, October.
    18. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    19. Singh, Harinder & Kwang W. Jun, 1995. "Some new evidence on determinants of foreign direct investment in developing countries," Policy Research Working Paper Series 1531, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Isabel Faeth, 2009. "Determinants Of Foreign Direct Investment – A Tale Of Nine Theoretical Models," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 165-196, February.
    2. Esiyok, Bulent, 2011. "Determinants of foreign direct investment in Turkey: a panel study approach," MPRA Paper 36568, University Library of Munich, Germany.
    3. Nguyen, Quyen T.K. & Kim, Sylvia, 2020. "The multinationality and performance relationship: Revisiting the literature and exploring the implications," International Business Review, Elsevier, vol. 29(2).
    4. Czinkota, Michael R. & Grossman, David A. & Javalgi, Rajshekhar (Raj) G. & Nugent, Nicholas, 2009. "Foreign market entry mode of service firms: The case of U.S. MBA programs," Journal of World Business, Elsevier, vol. 44(3), pages 274-286, July.
    5. Oh, Chang Hoon & Kim, Minyoung & Shin, Jiyoung, 2019. "Paths and geographic scope of international expansion across industries," International Business Review, Elsevier, vol. 28(3), pages 560-574.
    6. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    7. Zhou, Dongsheng & Li, Shaomin & Tse, David K., 2002. "The impact of FDI on the productivity of domestic firms: the case of China," International Business Review, Elsevier, vol. 11(4), pages 465-484, August.
    8. Mehmet Demirbag & Martina McGuinness & Hüseyin Altay, 2010. "Perceptions of Institutional Environment and Entry Mode," Management International Review, Springer, vol. 50(2), pages 207-240, April.
    9. Elizabeth L. Rose & Kiyohiko Ito, 2009. "Past Interactions and New Foreign Direct Investment Location Decisions," Management International Review, Springer, vol. 49(5), pages 641-669, October.
    10. Chris Wagner, 2020. "Deducing a state-of-the-art presentation of the Eclectic Paradigm from four decades of development: a systematic literature review," Management Review Quarterly, Springer, vol. 70(1), pages 51-96, February.
    11. Buckley, Peter J. & Munjal, Surender & Enderwick, Peter & Forsans, Nicolas, 2016. "Cross-border acquisitions by Indian multinationals: Asset exploitation or asset augmentation?," International Business Review, Elsevier, vol. 25(4), pages 986-996.
    12. Christophe, Stephen E. & Lee, Hun, 2005. "What matters about internationalization: a market-based assessment," Journal of Business Research, Elsevier, vol. 58(5), pages 636-643, May.
    13. Nigel Driffield, 2001. "Inward investment, industry concentration and the speed of adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(2), pages 193-214, June.
    14. Dimitris Giakoulas & Constantina Kottaridi, 2020. "Internationalization Strategies of the Greek MNEs during the Pre-Crisis Period: An Econometric Research Based on the OLI Model," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 70(1-2), pages 128-150, January-J.
    15. Andreas Bausch & Mario Krist, 2007. "The effect of context-related moderators on the internationalization-performance relationship: Evidence from meta-analysis," Management International Review, Springer, vol. 47(3), pages 319-347, June.
    16. Zhang, Yijing & Toppinen, Anne & Uusivuori, Jussi, 2014. "Internationalization of the forest products industry: A synthesis of literature and implications for future research," Forest Policy and Economics, Elsevier, vol. 38(C), pages 8-16.
    17. James, Barclay E. & Sawant, Rajeev J. & Bendickson, Joshua S., 2020. "Emerging market multinationals’ firm-specific advantages, institutional distance, and foreign acquisition location choice," International Business Review, Elsevier, vol. 29(5).
    18. Le Chang & Jing Li & Kee-Cheok Cheong & Lim-Thye Goh, 2021. "Can Existing Theories Explain China’s Outward Foreign Direct Investment in Belt and Road Countries," Sustainability, MDPI, vol. 13(3), pages 1-17, January.
    19. Lin, Feng-Jyh, 2010. "The determinants of foreign direct investment in China: The case of Taiwanese firms in the IT industry," Journal of Business Research, Elsevier, vol. 63(5), pages 479-485, May.
    20. Fang-Yi Lo & Yu-Ching Chiao & Chwo-Ming Joseph Yu, 2016. "Network and Institutional Effects on SMEs’ Entry Strategies," Management International Review, Springer, vol. 56(4), pages 531-563, August.

    More about this item

    Keywords

    Key words: FDI; firm-specific factors; panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:35119. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.