Networking and Foreign Direct Investment Activity
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Date
2002-09-01
Authors
Blonigen, Bruce A.
Wooster, Rossitza B. (Rossitza Bouneva), 1971-
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon, Dept. of Economics
Abstract
We conduct an empirical investigation into whether networking effects affect foreign direct investment (FDI) activity. Using bibliographical information on CEOs’ birth and education locations, we are able to identify changes from U.S. to foreign-connected CEOs that occurred in U.S. manufacturing firms of the S&P 500 from 1992 through 1997. Robust to a variety of specifications, we find that a U.S. firm’s switch from a U.S.- to a foreign-connected CEO leads to substantial increases in the firm’s proportion of its assets and sales that are in foreign markets. In fact, our preferred specification indicates that foreign asset and sales proportions increase 30 and 50%, respectively, for the five years after such a CEO switch is made. This is in contrast to U.S.-to-U.S. CEO switches in our sample that show no evidence of changes in a firms’ foreign market participation.
Description
Keywords
Multinational enterprises, Networking, Corporate governance, International economics