Papers by Nigel Driffield
The purpose of this paper is to examine, using panel data econometric techniques, the determinant... more The purpose of this paper is to examine, using panel data econometric techniques, the determinants of a firm’s strategy to invest in a conflict location. To the best of our knowledge this has not been done before. We use a large database of firm-level data that includes 2858 multinational firms that have a subsidiary in a developing country (during 1999-2006). Out of these firms 290 are classified as having a subsidiary in a conflict location. The choice of a conflict location is based on data from the Inter Country Risk Guide (ICRG). We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations. We have four hypotheses: (1) Firms with concentrated ownership are more likely to invest in a conflict region; (2) Firms from countries with weaker institutions are more likely to invest in conflict regions; (3) Firms and Countries with...
This paper examines what is still a relatively new phenomenon in the literature, the outsourcing ... more This paper examines what is still a relatively new phenomenon in the literature, the outsourcing / offshoring of high technology manufacturing and services. This has become a concern for both policy makers and academics for two reasons. Firstly, policy makers have become concerned that the offshoring of high technology sectors in the West will follow the more labour intensive sectors, and move to lower cost locations. Secondly, international business theory has tended to view low costs, and high levels of indigenous technological development as being the two main drivers of location advantage in the attraction of FDI. We show that this may not be the case for offshored high technology manufacturing or services
University of Warwick, Nov 1, 2017
Management International Review, 2022
This study examines Korean foreign direct investment (FDI) in the context of the organization and... more This study examines Korean foreign direct investment (FDI) in the context of the organization and development of local firms into global factories. Specifically, we explore the relationship between FDI decisions and the nature of Korea’s imported and exported goods. We argue that the global factory approach explains the mechanisms by which FDI can lead to technological upgrading. We employ a unique dataset that incorporates information on FDI motive from South Korea, as well as the unit value of traded goods within sectors. Our findings indicate that FDI location and motive vary by trade destinations and trade unit prices; something that has not received attention in existing literature.
This compilation contains a series of standardized country profiles of inward and outward foreign... more This compilation contains a series of standardized country profiles of inward and outward foreign direct investment (FDI), peer-reviewed by a global network of experts. The publication is intended to contribute to the analysis of trends in foreign direct investment and policy issues related to them. The reports, which cover inward and outward FDI for 22 countries (13 developed economies and 9 emerging markets), include statistics on FDI stocks and flows, output and employment of foreign affiliates, and sectoral and geographical FDI distributions. The reports also list principal foreign affiliates (for inward FDI), principal multinational enterprises (for outward FDI), together with lists of recent major M&As and greenfield investments. The standardized template used to produce the reports is also included. This volume is designed to become a reference tool for anyone interested in foreign direct investment.
forthcoming in The Manchester School This paper examines one of the basic tenets of UK industrial... more forthcoming in The Manchester School This paper examines one of the basic tenets of UK industrial policy, that attracting inward investment into the UK stimulates domestic productivity growth. A model of productivity growth is developed for the indigenous sector of UK manufacturing, linking domestic productivity growth to theoretical explanations of inward investment. The paper demonstrates that inward investment does stimulate productivity growth in the domestic sector of around 0.75 % per annum. However, this cannot be attributed to investment or output spillovers, but as a result of the productivity advantage exhibited by the foreign firms. J.E.L. classification: O31, F23
This paper examines the relationship between multinationality and firm performance. The analysis ... more This paper examines the relationship between multinationality and firm performance. The analysis is based on a sample of over 400 UK multinationals, and encompasses both service sector and manufacturing sector multinationals. This paper confirms the non-linear relationship between performance and multinationality that is reported elsewhere in the literature, but offers further analysis of this relationship. Specifically, by correcting for endogeneity in the investment decision, and for shocks in productivity across countries, the paper demonstrates that the returns to multinationality are greater than those that have been reported elsewhere, and persist to higher degrees of international diversification.
This paper revisits the issue of intra-industry foreign direct investment. This issue was conside... more This paper revisits the issue of intra-industry foreign direct investment. This issue was considered in Stephen Hymer’s early work, but was not subsequently developed, and was largely ignored in the literature for some time. Using the example of the UK, this paper traces the patterns of intra-industry FDI, both across countries and industries, for both the manufacturing and service sectors. Despite the undoubted increase in the integration of goods and factor markets since the time of Hymer's writing, the analysis presented here shows that the pattern has changed little in the last forty years. The paper then goes on to discuss the motives for intraindustry FDI, relating it to technology flows and factor cost differentials. Finally, we present some analysis relating intra-industry FDI to uneven development, both between developed and developing countries, and between regions of a developed country. It is clear that intra-industry FDI is still very much a developed country phenom...
This paper develops the literature concerning the growth effects of FDI in developing countries i... more This paper develops the literature concerning the growth effects of FDI in developing countries in the context of the importance of institutions. There is a large literature that seeks to determine the growth effects of FDI, and equally one that seeks to link FDI to institutional quality. However, while the potential endogeneity between growth and FDI has been commented on, paucity of data has tended to prevent a more systematic analysis of this. We extend this literature further by examining the growth effects of both institutional quality and education, for a panel of 57 developing countries over a period of 18 years. We show that while institutional quality is important for countries seeking to attract inward investment, it is not as important as education.
As the world becomes ‘flatter’ and firms have more locations available in which to site their act... more As the world becomes ‘flatter’ and firms have more locations available in which to site their activities, more and more locations are chasing the ‘holy grail’ of attracting high-tech activity, and particularly R&D. This is, however, often in the absence of a clear strategy of how to retain this investment once it has landed, and how to best encourage interactions between internationally mobile capital to maximise the benefits of that investment for a region. This review explores the empirical literature on the location of R&D and other hightech or innovation-intensive activities and explores the main findings of this in the context of local economic development or inward investment strategies.
The debate concerning the impact that attracting inward investment can have on local productivity... more The debate concerning the impact that attracting inward investment can have on local productivity has raged for some 30 years. The essential reason for this is that is that there was a juxtaposition between “cost per job” estimates regarding the benefits of seeking to attract inward investment through subsidy, and the firm-based academic literature that analysed firm internationalisation in terms of the new technology or knowledge that often accompanies foreign direct investment. Cynically, one may argue that the emphasis that was placed on determining the productivity growth effects of inward investment was an attempt to justify such subsidies, even when cost per job calculations were unfavourable, but both the policy-based and academic literature represents increasingly detailed attempts to determine the nature of the wider economic benefits of attracting inward investment.
Management International Review, 2020
Please refer to published version for the most recent bibliographic citation information. If a pu... more Please refer to published version for the most recent bibliographic citation information. If a published version is known of, the repository item page linked to above, will contain details on accessing it.
Journal of International Business Policy, 2020
This paper highlights an inherent contradiction that exists within investment promotion activitie... more This paper highlights an inherent contradiction that exists within investment promotion activities in rich countries. Since the financial crisis, many inward investment agencies have shifted their activities from job creation per se to seeking to attract investment in high-tech activities. Such knowledge-intensive sectors are engaged in what has become referred to as “the war for talent”, so locations need to understand their value proposition to firms, especially where labour is tight. This paper explores the implications of this, in terms of the impact on employment and earnings of high skilled labour. We show that, because skill shortages already exist in many of these sectors, seeking to attract inward investment in these sectors simply causes the earnings of such workers to be bid up, and employment in the incumbent sector to fall. We highlight the over-riding importance that firms place on the availability of skilled labour when determining locations, and how policies which pr...
Journal of World Business, 2019
Please refer to published version for the most recent bibliographic citation information. If a pu... more Please refer to published version for the most recent bibliographic citation information. If a published version is known of, the repository item page linked to above, will contain details on accessing it.
Contemporary Social Science, 2019
Please refer to published version for the most recent bibliographic citation information. If a pu... more Please refer to published version for the most recent bibliographic citation information. If a published version is known of, the repository item page linked to above, will contain details on accessing it.
Journal of Business Research, 2017
This paper investigates the impact of offshore outsourcing across 5,746 European service multinat... more This paper investigates the impact of offshore outsourcing across 5,746 European service multinational enterprises (MNEs) on employment at home. We estimate labour demand equations and specifically isolate the global financial crisis (GFC) by undertaking analysis through our longitudinal 19-year panel data, separately for the pre-(1997-2007) and crisis period (2008-2016). We distinguish between offshoring to high and low income countries, as well as between service industry groups. We show that there is some evidence that offshoring by location intensive service firms is associated with employment growth at home during the crisis period, while offshoring in information intensive industries in high income countries is associated with a reduction in employment at home, as firms offshore to be nearer to the client. Overall, our findings suggest that the crisis period has lessened the impact of offshoring service FDI on employment at home.
International Journal of Multinational Corporation Strategy, 2016
The purpose of this paper is to explore the changing motives and location choice patterns of fore... more The purpose of this paper is to explore the changing motives and location choice patterns of foreign direct investment (FDI) from South Korea to China. Prior to the global financial crisis of 2008, South Korean multinational enterprises (MNEs) invested in China for efficiency-seeking motives in order to take advantage of low costs. While evidence is emerging that MNEs from developed countries are now investing in China for market-seeking reasons, no such evidence exists for MNEs from Asia. This study exploits a unique data set to uncover a change in strategy by South Korean MNEs in China, both in terms of motive and location, something that has received little attention in the international business literature.
British Journal of Management, 2016
This paper seeks to examine the relationship between smoking bans and the propensity of tobacco f... more This paper seeks to examine the relationship between smoking bans and the propensity of tobacco firms to engage in FDI. Utilising international business theory based on the FSA/CSA matrix, we show that, contrary to what one may expect, that smoking bans at home are an important institutional intervention, reducing the propensity for firms to engage in FDI, even to countries without a ban themselves.
Uploads
Papers by Nigel Driffield