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Title: Unbundling institutional determinants of multinational investments
Authors: Xu, X 
Voon, JP
Shang, Y
Issue Date: 2017
Source: Applied economics, 2017, v. 49, no. 23, p. 2269-2285
Abstract: Previous studies often examined how a broad-based institution affects foreign direct investment (FDI) flows across countries. However, analysis of differential impacts of two or more constituent institutions within a broad-based institution appears to be more useful for policy decision-making. There is a paucity of studies on how constituent institutions within a broad measure of institution affect FDI across countries. Our article constitutes the first attempt in bridging this gap. In this article, we examine the relative effects of property rights institution (PI) and contracting institution (CI) on investment flows. Our results show that PI is much more important than CI in determining the cross-border flows of FDI and affiliate sales. Moreover, PI is found to be more important for FDI than for affiliate sales, indicating that final goods are less of a concern for being expropriated by governments and powerful elites than capital goods. Through unbundling a broad-based institution and examining how the constituent institutions affect investments flows, our article provides practical location decisions for investments in FDI, mergers and acquisitions (M&A) and affiliate sales.
Keywords: FDI
Property rights institution
Contracting institution
Publisher: Routledge, Taylor & Francis Group
Journal: Applied economics 
ISSN: 0003-6846
EISSN: 1466-4283
DOI: 10.1080/00036846.2016.1237754
Rights: © 2016 Informa UK Limited, trading as Taylor & Francis Group
This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 29 Sep 2016 (published online), available at:
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