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Inbound foreign direct investment and domestic entrepreneurial activity

Author

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  • Saurav Pathak
  • André Laplume
  • Emanuel Xavier-Oliveira

Abstract

There is an interesting and lively debate going on in the academic literature intersecting trade policy and entrepreneurship. Several studies have shown that inbound foreign direct investment (FDI) has a negative effect on rates of entrepreneurship, while others find the opposite - a higher rate of new firm creation associated with increased inbound FDI. We study the phenomenon using a cross-country analysis of data on entrepreneurs from 38 countries and from 2001 to - 2008. Results indicate that inbound FDI has negative associations with five types of entrepreneurship (nascent, new, early-stage, established, and high-growth) measured by the Global Entrepreneurship Monitor survey. In our discussion, we argue that our study supports the contention that studies counting new limited liability company registrations do not always measure the same thing as entrepreneurial entries (self-reports), leading to different, even opposite results when subjected to empirical analysis.

Suggested Citation

  • Saurav Pathak & André Laplume & Emanuel Xavier-Oliveira, 2015. "Inbound foreign direct investment and domestic entrepreneurial activity," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 27(5-6), pages 334-356, June.
    • Handle: RePEc:taf:entreg:v:27:y:2015:i:5-6:p:334-356
    DOI: 10.1080/08985626.2015.1058424
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    References listed on IDEAS

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    1. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014.
    2. Danakol, Seçil Hülya & Estrin, Saul & Reynolds, Paul & Weitzel, Utz, 2013. "Foreign Direct Investment and Domestic Entrepreneurship: Blessing or Curse?," IZA Discussion Papers 7796, Institute of Labor Economics (IZA).
    3. Edward M. Graham & Paul Krugman, 1995. "Foreign Direct Investment in the United States, 3rd Edition," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 52, January.
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    Cited by:

    1. Hong, Sanghyun & Robert Reed, W. & Tian, Bifei & Wu, Tingting & Chen, Gen, 2021. "Does FDI promote entrepreneurial activities? A meta-analysis," World Development, Elsevier, vol. 142(C).
    2. Bettin, Giulia & Massidda, Carla & Piras, Romano, 2024. "The intertwined role of social and financial remittances in new firms' creation," Journal of International Management, Elsevier, vol. 30(1).
    3. Fang, Hanqing & Chrisman, James J. & Memili, Esra & Wang, Minglin, 2020. "Foreign venture presence and domestic entrepreneurship: A macro level study," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 68(C).
    4. Ross Brown & Colin Mason, 2017. "Looking inside the spiky bits: a critical review and conceptualisation of entrepreneurial ecosystems," Small Business Economics, Springer, vol. 49(1), pages 11-30, June.
    5. Sara Amoroso & Bettina Müller, 2018. "The short-run effects of knowledge intensive greenfield FDI on new domestic entry," The Journal of Technology Transfer, Springer, vol. 43(3), pages 815-836, June.
    6. Yassaman Saadatmand & Dennis Barber, 2019. "Globalization, Gender And Entrepreneurial Activities In Latin America," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(04), pages 1-22, December.
    7. Serpil Dom Tomak, 2018. "An Analysis of the Macroeconomic Determinants of Entrepreneurial Activity in Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 128-136.
    8. Su, Zhongfeng & Li, Jiatao & Wei, Shihao & Wu, Zhan, 2024. "Effect of inward foreign direct investment on entrepreneurship productivity in emerging markets," Journal of International Management, Elsevier, vol. 30(1).
    9. Silveli Cristo-Andrade & João J. Ferreira, 2020. "Knowledge spillovers and strategic entrepreneurship: what researches and approaches?," International Entrepreneurship and Management Journal, Springer, vol. 16(1), pages 263-286, March.
    10. Tung Son Ha & Vu Tuan Chu & Mai Tuyet Thi Nguyen & Dung Hoai Thi Nguyen & Anh Ngoc Thi Nguyen, 2021. "The impact of Greenfield investment on domestic entrepreneurship," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-16, December.
    11. Yeganegi, Sepideh & Laplume, André O. & Dass, Parshotam, 2021. "The role of information availability: A longitudinal analysis of technology entrepreneurship," Technological Forecasting and Social Change, Elsevier, vol. 170(C).

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