The hassle factor: An explanation for managerial location shunning
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This study investigates the widely overlooked phenomenon of multinational enterprise (MNE) location avoidance, utilizing a multi-method research design and data on 131 foreign investment locations. It complements economic-choice-based location research by adding contextual dimensions at the country level that matter to managers personally, and affect decisions at the firm level. We provide a connection between international business research, the behavioral stream in economic geography, and the microfoundations stream in the strategic management literature. The results suggest that, in addition to traditional location choice criteria (including investment potential, internationalization strategy, and various geographic and psychic distances), foreign location decisions in MNEs are influenced by how troublesome it is for managers to travel to or live in certain places. An 11-item measure composed of travel inconveniences shows a significant negative moderating effect on the relationship between foreign direct investment potential and investment intensity. The effect is stronger for non-resource-seeking industries. We call this phenomenon the “hassle factor”.
Keywordstheory of FDI and the MNE (ownership–location–internationalization) foreign location choice behavioral geography multi-methods microfoundations hassle factor
This research was supported by the Social Sciences and Humanities Research Council of Canada (grant #411-98-0393). We thank Nathaniel Lupton and Vanessa Hasse for their support during various stages of this research. In addition, we thank the discussants, commentators, and participants of the JIBS special issue conference at Temple University in Philadelphia and the anonymous reviewers for the valuable comments and suggestions. Finally, we gratefully acknowledge the continuous, encouraging support and insightful feedback of the special issue editors Ram Mudambi and Sjoerd Beugelsdijk, and JIBS editor John Cantwell.
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