IDEAS home Printed from https://ideas.repec.org/a/sae/ilrrev/v51y1997i1p3-17.html
   My bibliography  Save this article

The Influence of Industrial Relations Factors on U.S. Foreign Direct Investment Abroad

Author

Listed:
  • William N. Cooke

Abstract

Although managers of multinational companies have identified labor practices and regulations, access to skilled labor, and similar factors as important considerations in foreign direct investment decision-making, few studies have empirically examined the influence of industrial relations factors on foreign direct investment. Applying a transaction costs framework to U.S. Department of Commerce data published in 1992, the author examines the influence of several key industrial relations variables on U.S. foreign direct investment across nine industries and nineteen OECD-member countries. Across the countries studied, U.S. foreign direct investment was negatively affected by the presence of high levels of union penetration, centralized collective bargaining structures, stiff government restrictions on layoffs, and pervasive contract extension policies; it was positively affected by high levels of education and policies requiring works councils.

Suggested Citation

  • William N. Cooke, 1997. "The Influence of Industrial Relations Factors on U.S. Foreign Direct Investment Abroad," ILR Review, Cornell University, ILR School, vol. 51(1), pages 3-17, October.
    • Handle: RePEc:sae:ilrrev:v:51:y:1997:i:1:p:3-17
    DOI: 10.1177/001979399705100101
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/001979399705100101
    Download Restriction: no
    File URL: https://libkey.io/10.1177/001979399705100101?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Richard B. Freeman & Edward P. Lazear, 1995. "An Economic Analysis of Works Councils," NBER Chapters, in: Works Councils: Consultation, Representation, and Cooperation in Industrial Relations, pages 27-52, National Bureau of Economic Research, Inc.
    2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    3. Richard B. Freeman, 1994. "Working Under Different Rules," NBER Books, National Bureau of Economic Research, Inc, number free94-1.
    4. Freeman, Richard B. & Katz, Lawrence F. (ed.), 1995. "Differences and Changes in Wage Structures," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226261607.
    5. 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, December.
    6. Cushman, David O, 1985. "Real Exchange Rate Risk, Expectations, and the Level of Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 297-308, May.
    7. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1.
    8. Peter J Buckley, 1988. "The Limits of Explanation: Testing the Internalization Theory of the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(2), pages 181-193, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrea Ascani & Riccardo Crescenzi & Simona Iammarino, 2015. "Economic Institutions and the Location Strategies of European Multinationals in their Geographical Neighbourhood," LEQS – LSE 'Europe in Question' Discussion Paper Series 97, European Institute, LSE.
    2. Uwe Jirjahn, 2022. "On the determinants of bargaining‐free membership in German Employers' Associations," Industrial Relations Journal, Wiley Blackwell, vol. 53(6), pages 545-558, November.
    3. John S. Heywood & Uwe Jirjahn, 2014. "Variable Pay, Industrial Relations and Foreign Ownership: Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 521-552, September.
    4. Michele Campolieti & Robert Hebdon & Benjamin Dachis, 2014. "The Impact of Collective Bargaining Legislation on Strike Activity and Wage Settlements," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 394-429, July.
    5. Cao, Jiyun & Mukherjee, Arijit, 2018. "Foreign direct investment, unionised labour markets and welfare," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 330-339.
    6. Mendoza, Ronald U. & Canare, Tristan A. & Ang, Alvin, 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Research Paper Series DP 2015-37, Philippine Institute for Development Studies.
    7. Peters Ralf-Henning & Schneider Kerstin, 2000. "Die Struktur kollektiver Lohnverhandlungen und ausfließende Direktinvestitionen in der OECD / The Structure of Collective Bargaining and Foreign Investment Outflows in the OECD," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(1), pages 48-63, February.
    8. Marlies Kluike & Kerstin Pull, 2013. "Similar, but still different: how US multinational companies in Germany and Switzerland use host-country training and skill practices," Industrial Relations Journal, Wiley Blackwell, vol. 44(5-6), pages 495-513, November.
    9. João Ricardo Faria, 2016. "Location Clusters, FDI and Local Entrepreneurs: Consistent Public Policy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(4), pages 858-868, December.
    10. Krzywdzinski, Martin, 2014. "Do investors avoid strong trade unions and labour regulation? Social dumping in the European automotive and chemical industries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 28(6), pages 926-945.
    11. Ang, Alvin & Mendoza, Ronald U. & Canare, Tristan A., 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Discussion Papers DP 2015-37, Philippine Institute for Development Studies.
    12. Gerda Dewit & Dermot Leahy & Catia Montagna, 2013. "Employment Protection, Flexibility and Firms' Strategic Location Decisions under Uncertainty," Economica, London School of Economics and Political Science, vol. 80(319), pages 441-474, July.
    13. Horst Feldmann, 2009. "The Quality of Industrial Relations and Unemployment in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 56-69, February.
    14. Roxana Radulescu & Martin Robson, 2008. "Trade Unions, Wage Bargaining Coordination, and Foreign Direct Investment," LABOUR, CEIS, vol. 22(4), pages 661-678, December.
    15. Uwe Jirjahn, 2017. "Globalisierung und betriebliche Mitbestimmung," Research Papers in Economics 2017-05, University of Trier, Department of Economics.
    16. Dewit, Gerda & Leahy, Dermot & Montagna, Catia, 2012. "Employment Protection, Flexibility and Firms’ Strategic Location Decisions under Uncertainty," SIRE Discussion Papers 2012-24, Scottish Institute for Research in Economics (SIRE).

    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. Olaf Hübler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, September.
    2. Richard B. Freeman, 2007. "Labor Market Institutions Around the World," NBER Working Papers 13242, National Bureau of Economic Research, Inc.
    3. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra‐Firm Wage Dispersion Among Blue‐Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.
    4. Acemoglu, Daron & F. Newman, Andrew, 2002. "The labor market and corporate structure," European Economic Review, Elsevier, vol. 46(10), pages 1733-1756, December.
    5. Francine D. Blau & Lawrence M. Kahn, 2005. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 184-193, February.
    6. Jirjahn, Uwe, 2003. "Betriebsräte, Tarifverträge und betriebliches Lohnniveau (Works councils, wage agreements and the company wage level)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 649-660.
    7. Rebecca M. Blank, 1997. "No Easy Answers: Comparative Labor Market Problems in the United States Versus Europe," Macroeconomics 9711003, University Library of Munich, Germany.
    8. Per-Anders Edin & Magnus Gustavsson, 2008. "Time Out of Work and Skill Depreciation," ILR Review, Cornell University, ILR School, vol. 61(2), pages 163-180, January.
    9. Susan N. Houseman, "undated". "Job Growth and the Quality of Jobs in the U.S. Economy," Upjohn Working Papers snh19951, W.E. Upjohn Institute for Employment Research.
    10. Jirjahn, Uwe, 2003. "Betriebsräte, Tarifverträge und betriebliches Lohnniveau (Works councils, wage agreements and the company wage level)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 649-660.
    11. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    12. Luis Ayala & Rosa Martinez & Jesus Ruiz-Huerta, 2002. "Institutional determinants of the unemployment-earnings inequality trade-off," Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 179-195.
    13. Jackman, Richard & Layard, Richard & Manacorda, Marco & Petrongolo, Barbara, 1997. "European versus US unemployment: different responses to increased demand for skill?," LSE Research Online Documents on Economics 2174, London School of Economics and Political Science, LSE Library.
    14. Eli Berman & Rohini Somanathan & Hong W. Tan, 2010. "Is Skill-Biased Technological Change Here Yet? Evidence from Indian Manufacturing in the 1990s," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 299-321, National Bureau of Economic Research, Inc.
    15. Anna Sabadash, 2013. "ICT-induced Technological Progress and Employment: A Literature Review," JRC Working Papers on Digital Economy 2013-07, Joint Research Centre.
    16. David Kucera, 1998. "Foreign Trade and Men and Women's Employment and Earnings in Germany and Japan," SCEPA working paper series. 1998-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School, revised Aug 1998.
    17. Uwe Jirjahn, 2014. "Works Councils and Collective Bargaining in Germany: A Simple but Crucial Theoretical Extension," Research Papers in Economics 2014-13, University of Trier, Department of Economics.
    18. Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 100-123, February.
    19. J. Mullen & Stephen Nord & Martin Williams, 2005. "Regional Skill Structure and the Diffusion of Technology," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(1), pages 115-131, March.
    20. Dennis J. Snower & Alessio J. G. Brown & Christian Merkl, 2009. "Globalization and the Welfare State: A Review of Hans-Werner Sinn's Can Germany Be Saved?," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 136-158, March.

    More about this item

    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:sae:ilrrev:v:51:y:1997:i:1:p:3-17. 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: SAGE Publications (email available below). General contact details of provider: http://www.ilr.cornell.edu .

    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.