Summary
Although there are numerous empirical examinations of the relationship between foreign direct investment and corporate performance, researchers to date have not been able to reach a consensus on findings. In this article, we report the results of an inquiry into the relationship between foreign direct investment and operational performance (i.e., labour productivity). Our findings indicate that a U-curve best reflects the form of the relationship and that the curve’s inflection point is dependent on firms’ industrial membership.
In conceptual terms, these results lend support to organizational learning theory. By relocating production facilities worldwide, firms can reap labour cost advantages. However, international production relocation can also come along with an employee qualification disadvantage that requires costly and time-consuming workforce training. Therefore, managers should aim for including both productivity components (i.e., labour costs and employee qualification) into their relocation decision-making process. Only then can the strategic instrument ‘international production relocation’ foster sustainable corporate success.
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Ruigrok, W., Wagner, H. Internationale Standortverlagerung und Mitarbeiterproduktivität: Eine empirische Untersuchung deutscher Industrieunternehmen. Schmalenbachs Z betriebswirtsch Forsch 57, 310–324 (2005). https://doi.org/10.1007/BF03372768
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DOI: https://doi.org/10.1007/BF03372768