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Networking and Foreign Direct Investment Activity

Author

Listed:
  • Bruce A. Blonigen

    (University of Oregon Economics Department)

  • Rossitza B. Wooster

    (California State University - Sacramento Economics Department)

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.

Suggested Citation

  • Bruce A. Blonigen & Rossitza B. Wooster, 2001. "Networking and Foreign Direct Investment Activity," University of Oregon Economics Department Working Papers 2002-8, University of Oregon Economics Department, revised 01 Sep 2002.
    • Handle: RePEc:ore:uoecwp:2002-8
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    File URL: http://economics.uoregon.edu/papers/UO-2002-8_Blonigen_Networking_FDI.pdf
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    More about this item

    Keywords

    Multinational Enterprises; Networking; Corporate Governance;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G3 - Financial Economics - - Corporate Finance and Governance

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