Decisions of Korean Multinational Enterprises to Select Host Countries
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This study aims to investigate how foreign-operations experience influences the decisions of Korean firms to select host countries. The sample is comprised of the direct investments of Korean manufacturing firms in Europe during the period of 1990-2011. The conditional logit model is employed because this model is suitable to examine the impacts of economic factors of host countries on the decisions of the Korean firms. Our results demonstrate that, as compared to first-time investors, experienced firms are less willing to invest in host countries where other Korean firms are already operating or in the EU member countries. This indicates that experienced firms take more risks of operating in unfamiliar markets such as non-EU countries in Eastern Europe, as they are more knowledgeable of the European market. However, no significant differences between the locational decisions of independent firms and group-affiliated firms are observed. This implies that the Korean firms do not sufficiently share experiential knowledge on the foreign market with their affiliates in the same business group. Therefore Korean firms need to communicate with their affiliates more effectively for the successful operations of their overseas subsidiaries.
Abstract
This study aims to investigate how foreign-operations experience influences the decisions of Korean firms to select host countries. The sample is comprised of the direct investments of Korean manufacturing firms in Europe during the period of 1990-2011. The conditional logit model is employed because this model is suitable to examine the impacts of economic factors of host countries on the decisions of the Korean firms. Our results demonstrate that, as compared to first-time investors, experienced firms are less willing to invest in host countries where other Korean firms are already operating or in the EU member countries. This indicates that experienced firms take more risks of operating in unfamiliar markets such as non-EU countries in Eastern Europe, as they are more knowledgeable of the European market. However, no significant differences between the locational decisions of independent firms and group-affiliated firms are observed. This implies that the Korean firms do not sufficiently share experiential knowledge on the foreign market with their affiliates in the same business group. Therefore Korean firms need to communicate with their affiliates more effectively for the successful operations of their overseas subsidiaries.
참고문헌 (27)
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