Journal of International Business Studies

, Volume 38, Issue 7, pp 1069–1094

Do managers behave the way theory suggests? A choice-theoretic examination of foreign direct investment location decision-making

  • Peter J Buckley
  • Timothy M Devinney
  • Jordan J Louviere
Article

DOI: 10.1057/palgrave.jibs.8400311

Cite this article as:
Buckley, P., Devinney, T. & Louviere, J. J Int Bus Stud (2007) 38: 1069. doi:10.1057/palgrave.jibs.8400311

Abstract

Many empirical examinations of foreign direct investment location choice have relied on the use of secondary data and surveys on the choices made by firms about the form and location of overseas investment. These studies have two inherent and related problems. First, they rely solely on the location choices made by different firms, and assume that the domains of possible options considered were the same. Second, there is an assumption about the rules used by firms to make these decisions, yet the decisions are made by boundedly rational managers. After reviewing the literature, this study examines managers’ choices about foreign investment location through the use of structured experimentation. The results show that in creating sets of investments to ‘consider’, managers appear to follow fairly rational rules. However, the choice of actual ‘investments’ appears less aligned to traditional models.

Keywords

location choice FDI managerial decision-making experimental methods 

Copyright information

© Academy of International Business 2007

Authors and Affiliations

  • Peter J Buckley
    • 1
  • Timothy M Devinney
    • 2
  • Jordan J Louviere
    • 3
  1. 1.Leeds University Business School, The University of LeedsUK
  2. 2.Australian Graduate School of Management, University of New South WalesAustralia
  3. 3.University of TechnologySydneyAustralia

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