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The location of activities of manufacturing multinationals in the Asia-Pacific

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Abstract

Analysis of survey results from 440 manufacturing multinationals active in the Asia-Pacific shows that there are significant differences in the patterns of location decisions for different corporate activities in the region. Analysis of a random effects mixed model of activity location suggests relationships between a variety of location and firm attributes and foreign investment in different activities, and shows that the patterns of significance among the explanatory variables differ across different activities. The results are consistent with the view that firm activities, along with resources and knowledge, should be viewed as fundamental components of the multinational firm.

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Authors and Affiliations

  1. School of Business, University of Hong Kong, Hong Kong

    Michael J Enright

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  1. Michael J Enright
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Correspondence to Michael J Enright.

Additional information

Accepted by J. Myles Shaver, Consulting Editor, 26 August 2008. This paper has been with the author for three revisions.

Appendices

APPENDIX A

The demographics of the sample are listed in Tables A1, A2 and A3.

Table a1 Worldwide sales in US$
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Table a2 Number of countries in which the firm is active
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Table a3 Nationality of firm
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APPENDIX B

Tables B1 and B2 provide examples of firm activity configurations chosen at random from the data set. The first firm (Table B1) has significant sales and customer service activities in all the economies of the region, production in four locations, corporate support activities in three economies, and research and development in three economies in the region. The second firm (Table B2) has significant sales and customer service activities in most of the economies of the region, production in one location, corporate support activities in four economies, and research and development in none of the economies in the region.

Table b1 In which locations does your company have significant activities?
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Table b2 In which locations does your company have significant activities?
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APPENDIX C

The present paper uses a sparse set of host country-specific variables. The literature cited above suggests that a much broader range of host-economy variables might be related to foreign investment, either in aggregate or in individual activities, including variables reflecting factor costs, infrastructure, technical capabilities, management capabilities, financial markets, capital controls, tariff rates, and unionization, among others. The trouble is that since the data set includes only 12 economies, obtaining sufficient variation in the explanatory variables is a real issue. Most of the additional variables one would ideally add are highly correlated with the DEVELOPMENT measure used in the paper – so much so that DEVELOPMENT is an extremely close proxy for most of these measures. Even if the variables are combined to form statistically valid constructs, the constructs behave like the DEVELOPMENT measure. The correlations (examples shown in Table C1), provide potential instability in results and multicollinearity diagnostics that are unacceptable. Thus a relatively sparse model was employed.

Table c1 Host-country variables, Pearson correlation coefficients
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Enright, M. The location of activities of manufacturing multinationals in the Asia-Pacific. J Int Bus Stud 40, 818–839 (2009). https://doi.org/10.1057/jibs.2009.2

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