Political stability and foreign subsidiary survival in the primary industries sector

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Behnam, Donya
University of Lethbridge. Dhillon School of Business
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This thesis investigated the impact of political stability on the survival of foreign direct investments in the primary industries sectors. It is based on the argument that less stable political environments can potentially allow foreign business investors to have more influence in shaping policy in favor of their strategic interests in the primary sector. Using a sample of 753 primary sector investments by Japanese multinational enterprises in existence from 1986 to 2013, I conducted a survival analysis to test my hypothesis as well as the moderating effect of a firm’s motives. This research contributes to the literature on political risk for foreign direct investment by building on the observation that, for primary industry investment, political stability has a non-monotonic effect on location attractiveness, which varies according to the specific motives of the foreign investor. Furthermore, the performance implications of political stability are important for multinational enterprise investors and policy makers alike.
Dissertations, Academic , International business enterprises , Investments, Foreign , Legitimacy of governments