Abstract
This paper shows that network linkage is an important determinant of location choice in foreign direct investment (FDI). Network linkages are divided into internal (intra-firm) and external (inter-firm) linkages. External linkages are further separated into strategic and relational linkages. We found that Taiwanese firms are keen on making external linkages, but are indifferent to, or incapable of, making internal linkages through FDI. Strategic linkages motivate Taiwanese FDI in the United States, while relational linkages facilitate Taiwanese FDI in Southeast Asia and China. Small firms are more sensitive to relational linkages than large firms in their choice of FDI location.
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*Homin Chen is Associate Professor of International Business Studies at National Chi-Nan University, Puli, Nantou, Taiwan. His research interests are international marketing strategies and international business theory. He has published in the Journal of Economic Development and Thunderbird International Business Review.
**Tain-Jy Chen is Professor of Economics at National Taiwan University, Taipei, Taiwan. His research interests are international economics and international business theory. His work has appeared in the Journal of International Economics, Journal of Development Economics, among others.
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Chen, H., Chen, Tj. Network Linkages and Location Choice in Foreign Direct Investment. J Int Bus Stud 29, 445–467 (1998). https://doi.org/10.1057/palgrave.jibs.8490002
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DOI: https://doi.org/10.1057/palgrave.jibs.8490002