Foreign multinational business-service companies in the USA - regional determinants of FDI location decision making

Abstract

This research sheds light on the relatively little-explored regional determinants of foreign direct investment location choice behavior of business service enterprises. The sample contains 311 foreign direct greenfield investment activities in 55 of 355 potential metropolitan statistical areas in the Unites States of America in the period between 2002 and 2012. By using the conditional logit regression, the study strives to ascertain two mechanisms. First, the effect of prior investments of business services that are active in the same sector were examined. Second, the research investigates whether there is an influence of prior investments of potential client companies that are active in manufacturing. Both mechanisms show significant positive results suggesting imitation behavior as an influencing factor for the locational choice of a firms’ foreign direct investment.