Do Managers Behave the Way Theory Suggests? A Choice Theoretic Examination of Foreign Direct Investment Location Decision Making

Journal of International Business Studies, Vol. 38, No. 7, December 2007

Posted: 22 Sep 2008

See all articles by Peter J. Buckley

Peter J. Buckley

University of Leeds - Leeds University Business School (LUBS); University of Leeds - Division of International Business

Timothy M. Devinney

University of Manchester - Alliance Manchester Business School

Jordan J. Louviere

University of South Australia - Institute for Choice

Date Written: September, 19 2008

Abstract

Many empirical examinations of foreign direct investment location choice have relied on the use of secondary data and surveys on the choices made by firms about the form and location of overseas investment. These studies have two inherent and related problems. First, they rely solely on the location choices made by different firms and assume that domain of possible options considered were the same. Second, there is an assumption about the rules used by firms to make these decisions, yet the decisions are made by boundedly rational managers. After reviewing the literature, this study examines managers' choices about foreign investment location through the use of structured experimentation. The results show that in creating sets of investments to consider, managers appear to follow fairly rational rules. However, the choice of actual investments appears less aligned to traditional models.

Keywords: Location Choice, FDI, Managerial Decision Making, Experimental Methods

Suggested Citation

Buckley, Peter Jennings and Devinney, Timothy M. and Louviere, Jordan J., Do Managers Behave the Way Theory Suggests? A Choice Theoretic Examination of Foreign Direct Investment Location Decision Making (September, 19 2008). Journal of International Business Studies, Vol. 38, No. 7, December 2007, Available at SSRN: https://ssrn.com/abstract=1270922

Peter Jennings Buckley

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

University of Leeds - Division of International Business ( email )

Leeds LS2 9JT
United Kingdom

Timothy M. Devinney (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Jordan J. Louviere

University of South Australia - Institute for Choice ( email )

Level 13
140 Arthur Street
North Sydney, New South Wales 2060
Australia

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
722
PlumX Metrics