The effect of FDI on domestic entrepreneurship: the case of greenfield investment and cross-border M&A activities

Minh Nguyen, Ngoc (2023) The effect of FDI on domestic entrepreneurship: the case of greenfield investment and cross-border M&A activities. Journal of Economics and Development, 25 (1). pp. 62-78.

[img]
Preview
PDF (Published Version) - Published Version
Available under License Creative Commons Attribution.

Download (260kB) | Preview
View at Publisher Website: https://doi.org/10.1108/JED-11-2022-0228
 
11
27


Abstract

Purpose: The paper examines the impact of foreign direct investment (FDI), either greenfield investment or cross-border mergers and acquisitions (M&As), on domestic entrepreneurship.

Design/methodology/approach: This paper uses a panel dataset of 104 countries over ten years from 2006 to 2015 and multiple econometric techniques to control for potential endogeneity bias.

Findings: FDI, both in the form of greenfield investment and cross-border M&As, exerts positive spillover that encourages domestic entrepreneurial activities. While the benefit of greenfield investment in entrepreneurship is more pronounced in countries with higher levels of market capacity and institutional support, that of cross-border M&As is not influenced by these factors. On the other hand, human capital is important in promoting the positive effects of both types of FDI, and unless the level of human capital in the host economies reaches a certain threshold, greenfield investment can adversely affect domestic entrepreneurship.

Practical implications: Policies toward FDI need to focus on promoting the driving forces behind FDI spillover to counteract the potential negative crowding-out effect of FDI.

Originality/value: The paper contributes to the existing literature investigating the impact of FDI on domestic entrepreneurship by distinguishing between the two FDI modes of entry and taking into account the moderating effects of sociopolitical characteristics of the host economies.

Item ID: 82134
Item Type: Article (Research - C1)
ISSN: 2632-5330
Keywords: Cross-border merger and acquisition, Entrepreneurship, Foreign direct investment, Greenfield investment, Spillover
Copyright Information: © Ngoc Minh Nguyen. Published in the Journal of Economics and Development. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at http://creativecommons.org/licences/by/4.0/
Date Deposited: 12 Mar 2024 01:28
FoR Codes: 38 ECONOMICS > 3801 Applied economics > 380110 International economics @ 100%
SEO Codes: 28 EXPANDING KNOWLEDGE > 2801 Expanding knowledge > 280108 Expanding knowledge in economics @ 100%
Downloads: Total: 27
Last 12 Months: 12
More Statistics

Actions (Repository Staff Only)

Item Control Page Item Control Page