Foreign Direct Investment Ownership Mode Strategy and the Influences of Pillars of Economic Freedom

Mujahid Hussain, Arslan Ahmad, Jorma Larimo

Research output: Chapter in Book/Report/Conference proceedingChapterScientific

Abstract

This paper addresses the influences of pillars of economic freedom in the host economies on foreign direct investment (FDI) ownership mode strategy of the multinational corporations (MNCs). Our study contributes to international business (IB) literature by being one of the first studies using the size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, business and labor to hypothesize and analyze ownership mode strategy options of the
MNCs (JVs vs. WOSs). It is also one of the first to address FDI ownership mode strategy of MNCs from an open and highly internationalized Nordic country (i.e. Finland) using relatively new and less researched concepts like different dimensions of economics freedom in the host emerging Asian economies. The
empirical analysis of 118 FDIs made by the Finnish firms in Asian economies indicates that easy access to sound money and high freedom to trade internationally lead to the preference of WOSs, while size of government and regulation of credit, labor and business lead to the preference of JVs by investing Finnish MNCs.
Original languageEnglish
Title of host publicationContributions to Mathematics, Statistics, Econometrics, and Finance : Essays in Honour of Professor Seppo Pynnönen
EditorsJohan Knif, Bernd Pape
Number of pages24
Place of PublicationVaasa
PublisherUniversity of Vaasa
Publication date2014
Pages347-370
ISBN (Print)978–952–476–522–0
ISBN (Electronic)978-952-476-523-7
Publication statusPublished - 2014
MoE publication typeB2 Book chapter

Keywords

  • 512 Business and Management
  • Economic Freedom, FDI, Ownership Mode Strategy, Asia
  • KOTA2014

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    Hussain, M., Ahmad, A., & Larimo, J. (2014). Foreign Direct Investment Ownership Mode Strategy and the Influences of Pillars of Economic Freedom. In J. Knif, & B. Pape (Eds.), Contributions to Mathematics, Statistics, Econometrics, and Finance: Essays in Honour of Professor Seppo Pynnönen (pp. 347-370). University of Vaasa. http://www.uva.fi/materiaali/pdf/isbn_978%E2%80%93952%E2%80%93476%E2%80%93523%E2%80%937.pdf