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The trend of foreign direct investment movement: Did unintended nation brand of legal-families play an instrumental role?

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  • Kam, Oi-Yan
  • Tse, Chin-Bun

Abstract

Combining the suggestion from Fan (2006) that a nation can have a brand image without deliberating efforts of nation branding and the work from Klerman et al. (2011) on Colonial History and effects on legal systems, we view that legal-systems could be an unintended nation brand that could instrumentally affect foreign direct investment (FDI) activities. We classify 193 countries according to their Colonial History or no-Colonial History into 5 legal-families. Applying Generalised Methods of Moments (GMM) on a set of panel data, our empirical evidence shows that legal-families play an instrumental role in explaining FDI activities. The paper opens up a new ground of research on ‘unintended’ nation brand of which the nation branding literature largely focus on designed-nation-brand, and on FDI area in which we introduce a new determinant in addition to the traditional determinants that have been reported in the FDI literature.

Suggested Citation

  • Kam, Oi-Yan & Tse, Chin-Bun, 2020. "The trend of foreign direct investment movement: Did unintended nation brand of legal-families play an instrumental role?," Journal of Business Research, Elsevier, vol. 116(C), pages 745-762.
    • Handle: RePEc:eee:jbrese:v:116:y:2020:i:c:p:745-762
    DOI: 10.1016/j.jbusres.2018.01.008
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    References listed on IDEAS

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    1. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
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