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Emotions and foreign direct investment: A theoretical and empirical exploration

Author

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  • Mindel Laar

    (Boston Consulting Group, Amsterdam office)

  • Chris Neubourg

    (Maastricht University)

Abstract

Abstract Emotions are largely absent in economic models. Possibly for this reason, many theories fail to explain the actual decisions made by managers. Therefore, we integrate emotions with regular microeconomic theory. We focus on FDI decisions, and include both economic and emotional variables in our analysis of the firm’s decision-making process. In our theoretical analysis, emotions are included in a utility maximization model that considers not only the utility of the firm but also the utility of the individual decision-maker. In our empirical analysis, the presence of emotions in FDI decision-making is tested using a sample of Dutch enterprises that considered an investment in Central or Eastern Europe between 1990 and 2000.

Suggested Citation

  • Mindel Laar & Chris Neubourg, 2006. "Emotions and foreign direct investment: A theoretical and empirical exploration," Management International Review, Springer, vol. 46(2), pages 207-233, March.
    • Handle: RePEc:spr:manint:v:46:y:2006:i:2:d:10.1007_s11575-006-0045-2
    DOI: 10.1007/s11575-006-0045-2
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