A ani is, Spy os; Hollens ein, Heinz; S ucki, Tobias
A icle
Does he explana o y powe o he OLI app oach di e
among sec o s and business unc ions? E idence om
i m-le el da a
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Sugges ed Ci a ion: A ani is, Spy os; Hollens ein, Heinz; S ucki, Tobias (2016) : Does he explana o y
powe o he OLI app oach di e among sec o s and business unc ions? E idence om i m-le el
da a, Economics: The Open-Access, Open-Assessmen E-Jou nal, ISSN 1864-6042, Kiel Ins i u e o
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Does he Explana o y Powe o he OLI App oach
Di e Among Sec o s and Business Func ions?
E idence om Fi m-le el Da a
Spy os A ani is, Heinz Hollens ein, and Tobias S ucki
Abs ac
As se ices and goods di e wi h espec o impo an cha ac e is ics, one may expec ha
he de e minan s o in e na ionalisa ion a e no iden ical o se ices and manu ac u ing.
Su p isingly, he e is p ac ically no i m-le el esea ch con as ing he wo sec o s in his
espec . To ill his gap, he au ho s aim a iden i ying o he wo sec o s he de e minan s o
a i m’s p opensi y o engage in expo s o FDI as well as he ac o s de e mining a i m’s FDI
s a egy in e ms o business unc ions. They ind ha an OLI-based model is well sui ed o
explaining he p opensi y o go in e na ional as well as he di e ences be ween speci ic o ms
o FDI in e ms o business unc ions bo h o manu ac u ing and se ices. As expec ed, he
explana o y powe o he OLI app oach is s onge o manu ac u ing han se ice ac i i ies.
Da a a ailable upon eques (see he ollowing link):
h p://www.economics-ejou nal.o g/da a-a ailabil y-dp-2015-67/ iew
JEL F23
Keywo ds Manu ac u ing s. se ices in e na ionalisa ion; o sho ing s. expo s;
in e na ionalisa ion o business unc ions; mul ina ional companies; in e na ional business
s a egy
Au ho s
Spy os A ani is, KOF Swiss Economic Ins i u e, ETH Zu ich, CH-8092 Zu ich,
[email p o ec ed]
Heinz Hollens ein, KOF Swiss Economic Ins i u e, ETH Zu ich, CH-8092 Zu ich,
[email p o ec ed]
Tobias S ucki, KOF Swiss Economic Ins i u e, ETH Zu ich, CH-8092 Zu ich,
[email p o ec ed]
Ci a ion Spy os A ani is, Heinz Hollens ein, and Tobias S ucki (2016). Does he Explana o y Powe o he
OLI App oach Di e Among Sec o s and Business Func ions? E idence om Fi m-le el Da a. Economics:
The Open-Access, Open-Assessmen E-Jou nal, 10 (2016-12): 1—46. h p://dx.doi.o g/10.5018/economics-
ejou nal.ja.2016-12
www.economics-ejou nal.o g 2
1 In oduc ion
The long- e m end o an inc easing sha e o se ice sec o FDI has accele a ed
o e he las wen y yea s (Dunning and Lundan 2008; Kundu and Me chan
2008). Ne e heless, empi ical esea ch on FDI is s ill concen a ed on
manu ac u ing. As he basic cha ac e is ics o se ices and goods di e – he main
speci ics o se ices a e in angibili y, insepa abili y o p oduc ion and
consump ion, he e ogenei y, pe ishabili y and es ic ed owne ship (Buckley e al.
1992) – one would expec ha he de e minan s o in e na ionalisa ion a e no he
same (o no ele an o same ex en ) in he wo sec o s (see, e.g., Boddewyn e al.
1986; Dunning 1989; Con ac o e al. 2003). This may hold ue al hough he
sepa a ion line be ween goods and se ices has become qui e blu ed (see, e.g.,
G ön oos 1999; Jack e al. 2008), e lec ing he g owing se ice con en o
manu ac u ing and a ce ain endency owa ds an indus ialisa ion o pa s o he
se ice sec o (Miozzo and Miles 2002; Gue ie i and Meliciani 2005).
Agains his backg ound, i is su p ising ha i m-le el econome ic esea ch
dealing wi h he in e na ionalisa ion o se ice i ms by way o FDI is sca ce and
s ill domina ed by he analysis o speci ic indus ies.1 The ew s udies ha co e
he en i e se ice sec o , wi h only some excep ions (Li and Guisinge 1992,
Kundu e al. 2008), a e de o ed o aspec s o in e na ionalisa ion ha we do no
analyse in he p esen con ibu ion.2
Fu he mo e, and mos impo an ly, he e is ha dly any empi ical wo k
con as ing se ices and manu ac u ing wi h espec o he ac o s de e mining
FDI. In ac , we a e awa e o only h ee s udies which sys ema ically explo e
_________________________
1 Econome ic indus y s udies became a ailable, wi h some excep ions, only in ecen yea s. To
men ion a e Lin (2010) and Na ayanan and Bha (2010) o ICT/so wa e; Con ac o and Kundu
(1998), B own e al. (2003), León-Da de e al. (2010) and Villa e al. (2012) o he ho el indus y;
U sacki and Ve insky (1992), Nachum and Wymbs (2005) and Ma iscal e al. (2012) o inancial
se ices; Te ps a and Yu (1988); Rod iguez and Nie o (2012) o some knowledge-in ensi e se ice
indus ies.
2 Fo example: o eign en y mode choice (E amilli and Rao 1993); ou sou cing (Mu ay and
Ko abe 1999); impac o in e na ionalisa ion on i m pe o mance (Con ac o e al. 2003); causal
ela ionship be ween manu ac u ing FDI and FDI in business se ices (Ne ussi and Schwellnus
2010).
www.economics-ejou nal.o g 3
di e ences be ween hese wo sec o s in his espec .3 Fi s ly, Lejp as (2009)
analyses o Ge many, using i m-le el su ey da a, a i m’s choice be ween
domes ic ac i i y and expo ing (accompanied by FDI and, al e na i ely, wi hou
FDI) and be ween domes ic ac i i y and FDI (wi hou expo s). The explana o y
a iables mainly e lec a i m’s capabili ies (inno a i eness, size, e c.) and i s
“en i onmen ” (compe i ion; a ac i eness o domes ic loca ions). Secondly,
Wagne (2014) in es iga es, based on Ge man da a, whe he he well documen ed
pecking o de o manu ac u ing i ms wi h espec o he way o going
in e na ional (only he mos p oduc i e i ms a e ac i e in FDI, less p oduc i e
ones a e expo e s, he leas p oduc i e companies exclusi ely se e domes ic
ma ke s) is also cha ac e is ic o he se ice sec o . This s udy is based on he
“he e ogeneous i m app oach” (Meli z 2003), which is qui e o en applied in
ecen yea s, bu only o manu ac u ing. Finally, Py and Ha em (2009) analyse he
loca ion o o eign in es men p ojec s o F ench companies, wi h hos coun y
a ibu es se ing as explana o y a iables. This s udy is, o ou knowledge, he
only one ha di e en ia es be ween in es men s in ol ing speci ic business
unc ions. In he p esen con ex , howe e , his pape is no e ec i ely ele an as
i ocuses on he loca ion choice, which is no he aim o ou analysis ha deals
wi h he de e minan s o he choice o he ype o o eign ac i i y. All in all, we
may conclude ha he empi ical knowledge wi h espec o he simila i ies and
di e ences be ween manu ac u ing and se ices i ms wi h espec o he
de e minan s o he in e na ionalisa ion o economic ac i i ies o i ms is limi ed.
The p esen s udy aims a illing his esea ch gap by iden i ying and
compa ing o he wo sec o s (a) he d i e s o he in e na ionalisa ion o i m
ac i i y in e ms o expo s and FDI, and (b) he de e minan s o he choice
be ween speci ic o ms o FDI in e ms o business unc ions. In o de o analyse
hese p oblems we o mula e wo empi ical models. In Model I (“INT_p o-
pensi y”), we es ima e he p obabili y o a i m o belonging o one o he
ollowing (mu ually exclusi e) h ee ca ego ies: “selling on domes ic ma ke s
only” (DOMESTIC), “se ing, addi ionally, expo ma ke s (wi hou any o -
_________________________
3 Ano he wo s udies ha deal wi h di e ences be ween he wo sec o s wi h espec o he di ec
o eign p esence a e B ou he s and B ou he s (2003) and Jaklic e al. (2012). The o me e e s o he
en y mode choice (wholly-owned subsidia ies s. join en u es), he la e o he impac o
in e na ional ou sou cing/o sho ing on i m pe o mance.
www.economics-ejou nal.o g 4
sho ing)” (EXPORT), and “o sho ing” (FDI). In Model II (“INT_ unc ion”), we
de e mine he likelihood o a i m o loca ing ab oad speci ic (combina ions o )
business unc ions, ha is (a) “o sho ing dis ibu ion and/o p oduc ion”
(FDI_DP) and (b) “o sho ing R&D ac i i ies, in addi ion o dis ibu ion and/o
p oduc ion” (FDI_RDP). The wo g oups o i ms, which a e subca ego ies o FDI,
again a e mu ually exclusi e.
Theo e ical amewo k o he empi ical analysis is he well-known OLI
pa adigm (Dunning 2000). We expec ha he explana o y powe o he OLI
a iables is lowe in he case o he se ice sec o han o manu ac u ing,
p ima ily because o he la ge he e ogenei y o i s ac i i ies, he pa icula
impo ance o so ac o s (as opposed o echnology- ela ed a iables) as well as
he signi icance o idiosync a ic and si ua ion-speci ic ac o s. Mo eo e , we a gue
ha he explana o y powe o OLI a iables is s onge o a complex s a egy o
FDI in e ms o business unc ions han o a less complex one, because he cos s
incu ed by he i s s a egy a e highe and may hus be o e come only in he
p esence o la ge O-ad an ages. Finally, we men ion al eady a his s age ha he
empi ical es s o hese hypo heses a e p ima ily based on he OL-pa o he OLI
pa adigm, as he da a a hand allow only a e y ough measu emen o I-
ad an ages (see Subsec ion 4.2).
The analysis is an ex ension o Hollens ein (2005), who es ima ed, using Swiss
da a o 1998, OLI-based models ha a e s uc u ally simila o Model I and II bu
did so only o he en i e business sec o . The esea ch also goes beyond he
al eady men ioned analysis o Lejp as (2009), who disagg ega ed he business
sec o in manu ac u ing and se ices and es ima ed a model compa able o ou
Model I ha dis inguishes be ween “expo ing only” and “di ec o eign p esence”.
This esea che , howe e , did no u he di e en ia e wi hin he ca ego y o i ms
wi h FDI as we do in Model II (di e ences be ween wo combina ions o business
unc ions). Simila ly, ou con ibu ion goes beyond Wagne (2014) who also
es ima ed Model I only. By es ima ing Model I and II we hus signi ican ly add o
p e ious e idence on he di e ences be ween manu ac u ing and se ice
companies wi h espec o he de e minan s o in e na ional ac i i ies.
The pape is based on a unique i m-le el da ase con aining in o ma ion om
1921 companies o he Swiss business sec o ha esponded o a comp ehensi e
su ey we conduc ed in 2010 among a andom sample d awn om he o icial
en e p ise census o 2008 ( esponse a e: 42%). The a ailable da a allow a ich

www.economics-ejou nal.o g 5
speci ica ion o he explana o y a iables o he wo models, in pa icula ly wi h
espec o he OL-pa o he OLI model.4 Using Swiss da a may be o gene al
in e es as he p ocess o in e na ionalisa ion o he Swiss economy is pa icula ly
ad anced (UNCTAD 2015).
In line wi h ou hypo heses, we ind, o bo h sec o s, ha an OLI-based model
(in pa icula he OL-pa ) is well sui ed no only o explaining he p opensi y o
i ms o go in e na ional by means o expo s and/o FDI (Model I) bu also o
iden i y he di e ences be ween speci ic o ms o FDI in e ms o business
unc ions (Model II). In all models, he explana o y powe o he OLI app oach is
s onge o manu ac u ing han o se ices. The esul s o manu ac u ing a e in
line wi h he s ages iew o in e na ionalisa ion, his is only pa ly he case o he
se ice sec o .
The s uc u e o he pape is as ollows: In he nex sec ion, we p esen he
concep ual amewo k and he ela ed hypo heses. In Sec ion 3, we desc ibe he
da abase and gi e some in o ma ion on he incidence o in e na ional ac i i ies o
Swiss companies. Sec ion 4 is de o ed o model speci ica ion, and in Sec ion 5 we
p esen he empi ical esul s and compa e hem wi h p e ious wo k. In he inal
sec ion, we summa ise and d aw some conclusions.
2 Concep ual amewo k and ela ed hypo heses
2.1 Theo e ical backg ound
Since Hyme (1976), he heo y o in e na ional in es men is based on he
assump ion o impe ec ma ke s. Unde hese condi ions, i m-speci ic
capabili ies yield a compe i i e edge independen o he economic a ac i eness o
di e en loca ions (see Ca es 1982) and, mo e o malised, he “new ade heo y”
(see, e.g., Helpman 1984). Mo eo e , he “ ansac ion cos heo y” s a es ha a
i m engages in FDI whene e he cos s o se ing up and unning a ansna ional
o ganisa ion o ac i i ies a e lowe han hose o ex e nal ma ke ansac ions
(Rugman 1981; Henna 1982; Buckley and Casson 1985; Williamson 1985). In
_________________________
4 The same da a ha e been success ully used o explaining he loca ion o he FDI o Swiss i ms
(A ani is e al. 2015) as well as hei choice be ween equi y-based and. non-equi y o eign en y
modes (Hollens ein and Be ge 2015).
www.economics-ejou nal.o g 6
addi ion, he e a e many pa ial hypo heses explaining speci ic aspec s o
in e na ionalisa ion ha a e oo ed in di e en sub-disciplines o economics such
as indus ial o ganisa ion, managemen sciences, e olu iona y economics
(Dunning 2000).
As ea ly as in he 1970s, Dunning a gued ha no single app oach is able o
explain a i m’s in e na ional ac i i ies (Dunning 1977, 1979). He p oposed an
eclec ic heo y o in e na ional p oduc ion, he well-known OLI pa adigm, which
he u he de eloped o e he yea s o accoun o changing ea u es o he
in e na ional economy and new heo e ical app oaches. In he mos ecen e sion
(Dunning and Lundan 2008) he OLI model applies no only o in e na ional
p oduc ion bu also o o he business unc ions. In addi ion, i emphasises he
s a egic aspec s o in e na ionalisa ion mo e explici ly by d awing on he
“ esou ce-based” (We ne el , 1984) o “dynamic capabili y” (Teece e al. 1997)
iew o he i m, o he concep o he “knowledge-based company” (Kogu and
Zande 1993).
We pos ula e ha he OLI pa adigm is an app op ia e heo e ical amewo k
o speci ying he explana o y pa o he wo models we es ima e in his pape ha
deals wi h he p opensi y o i ms o in e na ionalise hei ac i i ies (Model I:
INT_p opensi y) and wi h he likelihood o i ms o loca ing ab oad speci ic
(combina ions o ) business unc ions (Model II: INT_ unc ion). As men ioned in
Sec ion 1, we expec ha he explana o y powe o he OLI a iables is highe in
he case o he manu ac u ing han he se ices sec o (Model I) and highe o
complex s a egies o FDI in e ms o business unc ions han o less complex
ones (Model II).
The OLI model basically accoun s o h ee g oups o explana o y a iables:
1) “Owne ship-speci ic (O) ad an ages”, which a ise mainly om he a ailabili y
o i m-speci ic knowledge, human capi al, manage ial skills, p ope y igh s,
ma ke ing ou le s, access o inance o in e na ional expe ience. Fi ms
cha ac e ised by la ge O-ad an ages a e mo e likely o go in e na ional by way o
expo ing and/o FDI.
2) “Loca ion-speci ic (L) ad an ages“, which oo in di e ences be ween o eign
and domes ic loca ions wi h espec o ac o cos s, poli ical s abili y, he
egula o y amewo k o dis ance. This ype o ad an ages de e mines why a
company chooses an FDI-based s a egy o in e na ionalisa ion a he han one ha
www.economics-ejou nal.o g 7
is (pu ely) expo -o ien ed (L-ad an ages o o eign loca ions as a p econdi ion o
FDI). L-ad an ages, ob iously, would also be ele an o explaining whe e a i m
loca es i s FDI; howe e , his aspec is no ele an o ou analysis as we do no
aim a explaining loca ion choices.
3)“In e nalisa ion (I) ad an ages”, which allow i ms o educe isks and cos s o
ansac ions in impe ec ma ke o echnology o key in e media e p oduc s. I-
ad an ages a e ele an o choosing among se e al modes o o eign engagemen s
(e.g., wholly-owned subsidia y s. join en u es s. non-equi y based co-
ope a ions s. o he ela i ely loose ela ionships including expo s). In his pape ,
we only dis inguish be ween wo modes o o eign ac i i y, ha is a) FDI (i.e.
equi y-based o eign p esence) and b) expo s (which may (o may no ) be
complemen ed by non-equi y based o eign co-ope a ion). In he p esence o
signi ican I-ad an ages, FDI is he p e e ed mode o in e na ionalisa ion. We
no e again (see Sec ion 1) ha , due o insu icien da a, he empi ical analysis is
p ima ily based on he OL-pa o he OLI model.
We use some o he explana o y a iables ha complemen he h ee key
elemen s o he OLI model. Fi s , depending on he ma ke en i onmen (deg ee o
compe i ion, ma ke g ow h), i may be bene icial (o necessa y) o a i m o
ex end i s ac i i ies o o eign loca ions (e.g., “ i s mo e ” o “ ollow he leade ”
s a egy). Second, we p esume ha indus y a ilia ion is an impo an con ol
a iable as he ele ance o O-, L- and I-ad an ages a e likely o di e among
indus ies, in pa icula in he (he e ogeneous) se ice sec o (Dunning 1989).
The “model o he he e ogeneous i ms” (see he seminal pape s o Meli z
2003 and Helpman e al. 2004) would be ano he app oach one could use o
analysing in e na ionalisa ion s a egies o i ms. Recen empi ical esea ch
dealing wi h manu ac u ing la gely suppo s he main p oposi ion o his model,
s a ing ha only he mos p oduc i e i ms en e o eign ma ke s by FDI, he less
p oduc i e ones a e expo e s and he leas p oduc i e companies exclusi ely se e
domes ic ma ke s ( o a e iew see, e.g., G eenaway and Knelle 2007 o Wagne
2011). In he se ice sec o , howe e , he “pecking o de ” wi h espec o
p oduc i i y seems o be di e en . Acco ding o Wagne (2014) expo e s o
se ices a e mo e p oduc i e han se ice companies ha en e o eign ma ke s by
means o FDI. No wi hs anding he e idence o his widely used app oach, we
p e e he OLI model as amewo k o analysis as i p o ides a mo e de ailed iew
www.economics-ejou nal.o g 8
o he d i e s o in e na ionalisa ion han he “p oduc i i y app oach”. In ac , he
a iable “p oduc i i y” is a kind o a “black box” ep esen ing a whole bundle o
speci ic s eng hs (and weaknesses) o a i m which in luence he choice be ween
di e en in e na ionalisa ion s a egies. By using he OLI model we a e able o
iden i y he ele ance o he indi idual a iables included in he p oduc i i y black
box. In doing so, we ollow o he esea che s such as Cas ellani and Zan ei (2007)
o Cas ellani and Gio anne i (2010) who emphasised he need o looking inside
his black box. They ind o he I alian manu ac u ing sec o ha using inno a ion
and o he knowledge- ela ed a iables signi ican ly educes he explana o y powe
o p oduc i i y. Falk and Hags en (2015), using Swedish da a, go he same esul
o compu e and business se ices. Mo eo e , as will be shown in Subsec ion 4.2,
we do no use p oduc i i y as addi ional a iable o ou OLI model, as i is highly
co ela ed wi h he O- and I- a iables; including p oduc i i y would hus bias he
es ima es (mul icollinea i y).5
2.2 Hypo heses
In a i s s ep, we seek o iden i y he de e minan s o he p opensi y o a i m o
in e na ionalise i s ac i i ies (Model I: INT_p opensi y) based on he en i e
business sec o , al hough we p ima ily a e in e es ed in di e ences in his espec
be ween manu ac u ing and se ices i ms. In doing so, we a e able o gene ally
“ alida e” ou OLI-based app oach, which hen may se e as e e ence o he
subsequen analysis o di e ences/simila i ies be ween he manu ac u ing and he
se ice sec o .
As se ou in he p e ious subsec ion, O-ad an ages o i ms su ice o explain
why hey go in e na ional a all (by means o expo s and/o FDI). Mo eo e , FDI
is he p e e ed way o in e na ionalisa ion i a company, addi ionally, bene i s
om L-ad an ages o o eign loca ions and is able o in e nalise (in e na ional)
ma ke ela ions (I-ad an ages).
We hus pos ula e (Model I: INT_p opensi y):
_________________________
5 Mo eo e , eg ession esul s, no p esen ed he e, show ha he a iable “labou p oduc i i y” is
s a is ically no signi ican in an equa ion whe e i is added o he OI-pa o he OLI model.
www.economics-ejou nal.o g 15
a iable o Model I and Model II espec i ely, and (b) he sample unde lying he
es ima es (en i e business sec o , manu ac u ing, se ices). 8
The es ima ion o model I p o ides wo pa ame e ec o s, he i s one
e e ing o he ca ego y DOMESTIC, and he second one o FDI wi h EXPORT
used as e e ence ca ego y (see Table 4). In he case o Model II, we abula e only
he pa ame e ec o o FDI_RDP as FDI_DP is used as e e ence ca ego y.
Table 2: Speci ica ion o he dependen a iables
Dependen
a iable De ini ion
Model I
INT_
p opensi y
The i m belongs o one (and only one) o he ollowing ypes o i ms:
DOMESTIC: Fi ms wi h domes ic sales
EXPORT: Fi ms wi h domes ic and expo sales (bu no o sho ing)
FDI: Fi ms wi h any kind o di ec o eign p esence (in addi ion o domes ic
and expo sales)
EXPORT is used as e e ence ca ego y
Model II
INT_
unc ion The i m belongs o one (and only one) o he ollowing ypes o i ms:
DOMESTIC: Fi ms wi h domes ic sales
EXPORT: Fi ms wi h domes ic and expo sales (bu no o sho ing)
FDI_DP: Fi ms ha ing o -sho ed dis ibu ion and/o p oduc ion
FDI_RDP: Fi ms ha ing o -sho ed esea ch and de elopmen (R&D) in
addi ion o dis ibu ion and/o p oduc ion
FDI_DP is used as e e ence ca ego y
_________________________
8 Al hough we p esume ha he deg ee o in e na ionalisa ion is posi i ely ela ed o he numbe o
business unc ions loca ed ab oad (see Subsec ion 2.2), he mul inomial logi p ocedu e is mo e
adequa e han he o de ed p obi model used, o example, by Basile e al. (2003). Only in he o me
case, we ge o each explana o y a iable speci ic coe icien s o he di e en s a egies o
in e na ionalisa ion.

www.economics-ejou nal.o g 16
The econome ic analysis is based on c oss-sec ion da a. Consequen ly, all
a iables, in p inciple, could be endogenous, wha would imply biased pa ame e
es ima es. The endogenei y p oblem, o some ex en , is a enua ed as a subs an ial
numbe o he explana o y a iables migh be s uc u al in na u e, hus a e only
sligh ly changing o e ime (e.g., he sha e o employees wi h e ia y-le el
educa ion o he exis ence o R&D ac i i ies). Ne e heless, we canno e ade he
gene al endogenei y p oblem inhe en in c oss-sec ion analyses. The e o e, a he
han making causal claims we in e p e he es ima ed coe icien s as condi ional
co ela ions ha , howe e , do no p eclude an e alua ion o ou hypo heses.
4.2 Explana o y a iables
The explana o y a iables cap u e he mos impo an aspec s o O-, L- and I-
ad an ages, he i ms’ ma ke en i onmen and con ol a iables e e ing o some
s uc u al i m cha ac e is ics (indus y a ilia ion, o eign owne ship). In Table 3
we p esen he exac de ini ion, measu emen and sign expec a ion o he
a iables, and Table A.3 in he Appendix shows he ela ed desc ip i e s a is ics.
O-ad an ages
We expec ha his ca ego y o a iables ep esen ing i m-speci ic capabili ies is
posi i ely ela ed o in e na ional ac i i y by means o expo s and/o FDI. We
conside , i s ly, wo indica o s o he inno a ion capaci y o i ms, ha is in-house
R&D ( &d) and he sales sha e o new o signi ican ly imp o ed p oduc s
(inno_sales). Mo eo e , we ake in o accoun he use o high-le el human
esou ces ( e ia y_academic). We also inse a measu e o he e ec i eness o he
p o ec ion o knowledge (app op iabili y), which co e s pa en ing and o he legal
igh s (b ands, copy igh s) as well as in o mal app op iabili y mechanisms (e.g.,
ime lead o sec ecy). Finally, we include wo indica o s o a i m’s in e na ional
expe ience, which is a co e a iable o he s ages iew o in e na ionalisa ion
(Johanson and Vahlne 1977), i.e. he age o a company ( i m_age) and he
ele ance o expe ience- ela ed obs acles o o eign ac i i ies (obs _expe ience).
Fi m age should be posi i ely ela ed o in e na ionalisa ion, whe eas we expec a
nega i e sign o he obs acle a iable as i is in e sely ela ed o o eign
expe ience.
www.economics-ejou nal.o g 17
Table 3: Speci ica ion o he explana o y a iables o Model I o II
Explana o y a iable Desc ip ion Expec ed
signs
O-ad an ages
&d
R&D ac i i ies, 2006-2008 (yes/no, dummy a iable)
+
inno_sales
Sales sha e o inno a i e p oduc s, loga i hm, 2008
+
e ia y_academic
Sha e o employees wi h academic educa ion, loga i hm, 2008
+
app op iabili y
E ec i eness o knowledge p o ec ion
(dummy a iable (high/low e ec i eness) based on he
a e age o i m assessmen s on a 5-poin Like scale o
ou means o p o ec ion: pa en s, adema ks, copy igh s,
in o mal mechanisms)
+
i m_age
Age o he i m (yea s), loga i hm, 2008
+
O- ela ed obs acles o in e na ionalisa ion:
(dummy a iable based on a i m’s assessmen o he ele ance o his speci ic obs acle
on a 5-poin Like scale: alue 1 (high) o sco es 4 o 5, o he wise 0 (low))
obs _expe ience
Lack o o eign expe ience
-
L-disad an ages o hos loca ions:
L- ela ed obs acles o in e na ionalisa ion:
(dummy a iables based on i m assessmen s o he ele ance o speci ic obs acles
on a 5-poin Like scale: alue 1 (high) o sco es 4 o 5, o he wise 0 (low))
obs _dis ance
La ge geog aphical dis ance
-
obs _cul u e
La ge cul u al di e ence
-
obs _cos
High cos s o in e na ionalisa ion
-
obs _ egula ion
Res ic i e egula ions in o eign loca ions
-
obs _ins abili y
Poli ical ins abili y in a ge coun ies
-
obs _local_ alue
En o ced gene a ion o high local alue added
-
obs _ ech_ ans e
Obliga ion o ans e echnology o local ac o s
-
obs _IPR_p o ec ion
Insu icien p o ec ion o IPRs in hos coun ies
-
I-ad an ages, i m size
size, size2
Numbe o employees (in 1000) and i s squa e, 2008
+ / ?
coope a ion
Co-ope a ion wi h domes ic i ms (yes/no, dummy a iable)
+
Table 3 con inued
www.economics-ejou nal.o g 18
Table 3 con inued
Explana o y a iable Desc ip ion Expec ed
signs
Ma ke en i onmen
compe i ion
Sha e o i ms a he 3-digi indus y le el which a e
con on ed wi h s ong p ice compe i ion, 2008:
Fi ms wi h an assessmen o 4 o 5 on a i e poin Like
scale
+
demand_ end
Sha e o i ms a he 3-digi indus y le el which bene i
om s ongly g owing ma ke s in he pe iod 2006-2011:
Fi ms wi h an assessmen o 4 o 5 on a i e poin Like
scale)
+
Con ol a iables
o eign
The i m is a o eign-owned subsidia y p ima ily ocusing on
he domes ic ma ke (yes/no; dummy a iable)
-
egional_ma ke
The local/ egional ma ke a home is su icien ly la ge:
(dummy a iable based on a i m’s assessmen on a i e
poin Like scale: alue 1 (high) o sco es 4 o 5, o he wise
0 (low))
-
indus y
Indus y dummies (2-digi ) in manu ac u ing (16) and
se ices (9)
L-ad an ages
In many s udies L-ad an ages se e o explain whe e a i m loca es i s FDI
p ojec s. Acco dingly, cha ac e is ics o po en ial a ge egions/coun ies (wage
cos s, ac o endowmen , e c.) a e used as measu es o L-ad an ages. In con as ,
we aim a explaining why a i m uses he one o he o he way o going
in e na ional (i.e. o sho ing s. expo ing). To his end, we inse as explana o y
a iables a se o i m-le el indica o s ep esen ing disad an ages o o eign
coun ies as a whole (i.e. wi hou di e en ia ion among o eign loca ions) as
compa ed o Swiss loca ions. These a iables e lec a i m’s assessmen o he
ele ance (high/low) o a numbe o loca ion- ela ed obs acles o in es ing ab oad
(e.g., “ he egula o y amewo k in hos coun ies is un a ou able o FDI”).
The e o e, we expec a nega i e ela ionship be ween he obs acle a iables and
FDI.
Mo e speci ically, he L-pa o he empi ical model is made up o eigh
measu es o obs acles, which acco ding o an explo a o y analysis a e (s a is i-
www.economics-ejou nal.o g 19
cally) he mos pe inen ones. In acco dance wi h he g a i y model o
in e na ional ade and in es men he model con ains a iables ep esen ing he
geog aphical and cul u al dis ance be ween Swi ze land and o eign loca ions
(obs _dis ance, obs _cul u e). Fu he mo e, we conside high cos s o in es ing
ab oad (obs _cos ). We also inse some measu es depic ing a se o egula ion-
ela ed L-disad an ages o hos coun ies: es ic i e egula o y amewo k in
gene al (obs _ egula ion); obliga ion o gene a e locally a la ge sha e o alue
added (obs _ alue); o ced echnology ans e o local i ms/ins i u ions
(obs _ ech_ ans e ); insu icien en o cemen o IPRs in hos coun ies
(obs _IPR_p o ec ion). Fu he mo e, we include a measu e o he ele ance o
poli ical ins abili y in o eign loca ions as an impedimen o in e na ional ac i i y
(obs _ins abili y).9
As men ioned be o e, he “obs acle a iables” a e expec ed o be nega i ely
ela ed o FDI. Howe e , in ce ain cases we would no be su p ised o ind a
posi i e sign indica ing ha a i m pe cei es (o becomes awa e o ) a speci ic
obs acle only when i is eally con on ed wi h such an impedimen (e.g.,
“insu icien en o cemen o IPRs in hos coun ies”; see he discussion o he
es ima ion esul s in Sec ion 5). This in e p e a ion o a posi i e sign in case o
“obs acles a iables” is widely-used in inno a ion esea ch (see, e.g., Galia and
Leg os 2004; Tou igny and Le 2004), and mo e ecen ly also in he
in e na ionalisa ion li e a u e (see, e.g., Ramme and Schmiele 2008; A ani is and
Hollens ein 2011).
I-ad an ages, i m size
I-ad an ages, which a e ele an o choosing be ween o eign en y modes (in ou
case be ween FDI and expo s), should be posi i ely ela ed o FDI. Howe e , i is
di icul o ind sa is ac o y indica o s o his ype o ad an ages. Fi s ly, om a
heo e ical poin o iew, I-ad an ages should be measu ed a he le el o
_________________________
9 Based on an explo a o y analysis o he obs acles o be p esen in o eign loca ions, we do no
include some o he po en ial impedimen s o which he “Swiss In e na ionalisa ion Su ey 2010”
p o ides da a. To men ion a e high coo dina ion cos s, high inancial isks, insu icien inance,
es ic ions o he ans e o p o i s, legal unce ain ies, lack o quali ied manpowe . Fo some o
hese obs acles i is qui e su p ising ha hey appa en ly a e no ele an . This is pa ly due o
co ela ions wi h obs acles we include in he model (e.g., co ela ion o obs _ins abili y wi h “legal
unce ain y”, o obs _cos wi h “high inancial isks” and “insu icien inance”).
www.economics-ejou nal.o g 20
indi idual ansac ions (i.e. sepa a ely o each in es men p ojec loca ed ab oad)
a he han a i m le el, which is no easible wi h he da a a hand. Secondly,
e en a he i m le el, we ha e o ely on p oxy a iables ha a e qui e gene al.
We use wo indica o s o I-ad an ages, i.e. i m size and co-ope a ion expe ience
ha we in e p e as measu es o a i m’s “capaci y o in e nalize ma ke ela ions”.
We assume ha la ge i ms a e in a be e posi ion han small ones o educe
ansac ion cos s by in e nalising ma ke ela ionships: economies o scale in he
go e nance o o eign a ilia es o join en u es, highe powe o ba gain wi h
o eign uni s, ad an ages in moni o ing quali y-s anda ds o be me by a ilia es.
Fi m size may hus e ec i ely be used as an o e all indica o o I-ad an ages
(al hough i also cap u es size- ela ed O-ad an ages ha a e no explici ly
speci ied in he empi ical model). We measu e i m size by he numbe o
employees (size) and, o accoun o a possible nonlinea ela ionship, by i s squa e
(size2). Fo he quad a ic e m we expec an insigni ican o a nega i e coe icien ,
he la e meaning ha i m size only ma e s up o a ce ain h eshold. Mo eo e ,
we main ain ha expe ience gained om co-ope a ing wi h o he companies
(coope a ion) can be used as an indica o o I-ad an ages as i may enhance a
i m’s capabili y o in e nalise ma ke ela ionships.
All in all, as ou speci ica ion o I-ad an ages is no e y sa is ac o y, we
in e p e he empi ical esul s o Model I and II, in he i s ins ance, by e e ing o
he OL-pa o he OLI model.
Ma ke en i onmen
We expec ha in ensi e compe i ion on a i m’s ma ke s (compe i ion) en o ces a
company o become ac i e in o eign loca ions o is an incen i e o do so (“ ollow
he leade ” o “ i s mo e ” s a egy). Fu he mo e, s ongly g owing wo ld
ma ke s in he ield o a i m’s ac i i ies (demand_ end) is ano he incen i e o
in e na ional engagemen s. We hus expec o bo h a iables a posi i e sign.
Con ol a iables
We ake accoun o he ac ha some i ms may epo ha hey do no see any
obs acle o FDI jus because hey ne e hough o doing business ab oad. To his
end, we inse a con ol a iable indica ing ha a i m’s “local/ egional ma ke a
home is la ge enough” ( egional_ma ke ), implying ha i does no see any need o
go in e na ional (nega i e ela ionship o in e na ionalisa ion). By including his

www.economics-ejou nal.o g 21
a iable we make su e ha he es ima es o he “obs acle a iables” (L-
disad an ages) a e no biased.
Fu he mo e, we con ol o he ac ha o eign-owned companies ( o eign)
o en a e p ima ily o ien ed owa ds he Swiss ma ke ; his a iable should hus be
nega i ely ela ed o expo ing as well as o FDI. Finally, we inse a la ge se o
indus y dummies (indus y) ep esen ing, o example, mac oeconomic condi ions
p e ailing in he speci ic indus ies in he e e ence yea 2010. In addi ion,
indus y dummies con ol o a (possible) “omi ed a iable bias”. They also
should make su e ha he explici ly speci ied a iables e ec i ely cap u e
beha iou al di e ences among i ms a he han indus y-speci ic cha ac e is ics.
5 Resul s
5.1 Model I: INT p opensi y
5.1.1 Business sec o (H1)
Remembe ha we e alua e he coe icien s o he a iables explaining
DOMESTIC and FDI agains hose o he i ms ha a e in e na ionally ac i e
solely h ough domes ic and expo sales (EXPORT). The e o e, a s a is ically
signi ican nega i e sign o he coe icien o DOMESTIC in combina ion wi h a
signi ican posi i e sign o he coe icien o FDI (deno ed as
DOMESTIC<EXPORT<FDI) o O- and I- a iables indica es a mono onically
inc easing posi i e e ec o a ce ain a iable on a i m’s in e na ionalisa ion, hus
ex ending ac i i ies om only domes ic ac i i ies o expo s and u he o FDI
(see, e.g., a iable &d). This can be he case also pa ially, namely i he
coe icien only inc eases ei he om DOMESTIC o EXPORT
(DOMESTIC<EXPORT≅FDI), e.g., a iable app op iabili y, o om EXPORT
o FDI (DOMESTIC≅EXPORT<FDI), e.g., inno_sales. In case o he O- ela ed
obs acle “lack o o eign expe ience” (“obs _expe ience”) i is he o he way ound
as his a iable ep esen s a disad an age o a i m; in his case, we expec an
inc easing posi i e e ec on in e na ional ac i i y i DOMESTIC>EXPORT>FDI.
Mo eo e , as he L- ela ed obs acles e lec disad an ages o hos coun ies,
o sho ing is p e e ed o expo ing i EXPORT>FDI. No ice ha L-disad an ages
a e i ele an o explaining a shi om DOMESTIC o EXPORT; we hus expec
www.economics-ejou nal.o g 22
ha he coe icien s o he L- a iables a e s a is ically insigni ican in case o
DOMESTIC.
The Columns 1 and 2 o Table 4 show ha O-ad an ages a e e y impo an
d i e s o in e na ionalisa ion as all coe icien s o he O- a iables a e signi ican ly
posi i e (and, as expec ed, nega i e in case o obs _expe ience). Some coe icien s
mono onically inc ease ( &d, e ia y_academic), o he s inc ease pa ly
(inno_sales, app op iabili y, i m_age), and he coe icien s o he O- ela ed
obs acle obs _expe ience mono onically dec ease. The es ima es hus s ongly
suppo he O-pa o he model.
The esul s o he a iables ep esen ing L-disad an ages o o eign loca ions
con i m he hypo hesis ha hey a e ele an only o he shi om EXPORT o
FDI; none o he coe icien s o DOMESTIC is signi ican . In con as , we ind
s a is ically signi ican e ec s o he ansi ion om EXPORT o FDI o
p ac ically all L- ela ed obs acles. Fou o hem show he pos ula ed nega i e sign,
meaning ha hey de e a i m om being di ec ly ac i e a o eign loca ions:
(la ge) geog aphic dis ance (obs _dis ance), high cos s o in e na ionalisa ion
(obs _cos ), obliga ion o p oduce locally a subs an ial pa o he alue added
(obs _local_ alue), and, inally, o ced echnology ans e (obs _ ech_ ans e ).
We do no ind a signi ican e ec o poli ical ins abili y in po en ial hos
coun ies (obs _ins abili y).
Con a y o ou expec a ions, we ob ain o h ee L- ela ed obs acle a iables a
posi i e sign: cul u al di e ence (obs _cul u e), es ic i e egula o y en i onmen
(obs _ egula ion) and insu icien p o ec ion o IPRs in hos coun ies
(obs _IPR_p o ec ion). In he case o hese a iables, we a gue (see Subsec ion
4.2) ha a posi i e sign e lec s he ac ha i ms pe cei e (o ge awa e o ) he
speci ic hind ance no un il hey ha e al eady engaged in di ec o eign ac i i ies
(FDI). Cul u al di e ences ha make in e na ional ansac ions mo e di icul may
mani es hemsel es only as he company has become di ec ly p esen ab oad; o
example, FDI may acili a e he adap a ion o p oduc s o local as es. Mo eo e , i
o en is di icul o en o ce IPRs wi hou knowledge o local condi ions and
wi hou (pe sonal) ela ionships o local ac o s; hence, i IPRs a e impo an o
pene a ing o eign ma ke s, a di ec p esence ab oad is supe io o expo ing.
Conside a ions along simila lines apply in he case o egula o y obs acles, as
knowledge o local condi ions usually is necessa y o op imally adap o egula o y
www.economics-ejou nal.o g 23
Table 4: Resul s o Model I: INT_p opensi ya
Business sec o Manu ac u ing Se ices
Explana o y a iable DOMESTIC
FDI
DOMESTIC
FDI DOMESTIC
FDI
O-ad an ages
&d
–.708***
.823***
–.707***
.883***
–.508
.868**
(.19)
(.18)
(.26)
(.22)
(.35)
(.39)
inno_sales
.050
.177***
.022
.182**
.057
.167
(.06)
(.06)
(.08)
(.08)
(.08)
(.11)
e ia y_academic
–.257***
.187***
–.286**
.125
–.274***
.195*
(.06)
(.07)
(.11)
(.09)
(.08)
(.12)
app op iabili y
–.276***
.015
–.197*
–.004
–.248*
.072
(.08)
(.09)
(.12)
(.11)
(.13)
(.17)
i m_age
.074
.350***
.139
.445***
–.043
.201
(.09)
(.10)
(.14)
(.13)
(.13)
(.17)
O- ela ed obs acles
obs _expe ience
.449**
–.473**
.446
–.643**
.740**
.044
(.20)
(.22)
(.28)
(.29)
(.31)
(.43)
L-(dis)ad an ages
L- ela ed obs acles
obs _dis ance
.044
–.422**
–.252
–.351
.525*
–.501
(.19)
(.22)
(.28)
(.27)
(.31)
(.46)
obs _cul u e
.138
.842***
.309
1.26***
–.176
.175
(.24)
(.24)
(.37)
(.32)
(.34)
(.43)
obs _cos
–.279
–.565***
–.077
–.445*
–.858***
–.846**
(.18)
(.19)
(.24)
(.24)
(.28)
(.38)
obs _ egula ion
.204
.684***
.087
.806***
.221
.563
(.22)
(.22)
(.37)
(.29)
(.32)
(.41)
obs _ins abili y
–.160
.345
–.393
.163
.009
.554
(.25)
(.23)
(.38)
(.29)
(.39)
(.45)
obs _local_ alue
.024
–.506**
.070
–.476
.043
–.473
(.27)
(.26)
(.38)
(.33)
(.41)
(.56)
obs _ ech_ ans e
–.180
–.575**
–.120
–.756**
.021
–.447
(.37)
(.29)
(.50)
(.35)
(.61)
(.75)
obs _IPR_p o ec ion
.248
.510*
.176
.925***
–.247
–1.04
(.34)
(.28)
(.46)
(.33)
(.51)
(.73)
Table 4 con inued
www.economics-ejou nal.o g 24
Table 4 con inued
Business sec o Manu ac u ing Se ices
Explana o y a iable DOMESTIC
FDI
DOMESTIC
FDI DOMESTIC
FDI
I-ad an ages, i m size
size
2E-05
6E-04***
-6E-04
1E-03**
6E-05
3E-04
(2E-04)
(2E-04)
(9E-04)
(5E-04)
(3E-04))
(3E-04)
size2
–1E-07
–9E-06**
–7E-05
–1E-04*
2E-06
–1E-06
(4E-06)
(4E-06)
(2E-04))
(5E-05))
(3E-05)
(3E-05))
coope a ion
–.029
.262*
.162
.448**
–.315
–.061
(.15)
(.15)
(.23)
(.19)
(.21)
(.28)
Ma ke en i onmen
compe i ion
–.294
1.25*
–.584
.989
–.020
2.15**
(.61)
(.70)
(1.1)
(1.2)
(.74)
(.92)
demand_ end
–2.48***
1.20
–3.81***
1.43
–.862
3.08**
(.65)
(.76)
(1.0)
(1.1)
(.91)
(1.3)
Con ol a iables
o eign
–.117
–2.08***
–.192
–2.18***
–.118
–2.06***
(.20)
(.28)
(.32)
(.37)
(.29)
(.48)
egional_ma ke
1.26***
–.979***
1.53***
–.704***
1.05***
–1.18***
(.14)
(.18)
(.21)
(.25)
(.23)
(.30)
indus y
Yes
Yes
Yes
S a is ics
N
1’921
1’000
757
Wald χ2
3851.6***
1072.8***
1786***
Pseudo R2
.338
.332
.246
a Fi ms wi h “domes ic sales only” (DOMESTIC) and hose wi h “di ec o eign ac i i y” (FDI),
e alua ed agains he e e ence g oup o i ms wi h “expo and domes ic sales only” (EXPORT);
mul inomial logi es ima es.
The mul inomial logi model es ima es o each explana o y a iable wo slope pa ame e s wha
allows o e alua e whe he he esponses DOMESTIC and FDI espec i ely signi ican ly di e om
he e e ence le el EXPORT. The es ima es o he in e cep s and he indus y dummies ha e been
h oughou omi ed. The signi icance o he pa ame e s is indica ed wi h ***, ** and * esp.
ep esen ing he 1%, 5% and 10%-le el wi h obus s anda d e o s in b acke s. The
cons uc ion/ene gy sec o (N=164) is included in he es ima es o he o al business sec o
(N=1921) bu excluded in case o manu ac u ing (N=1000) and se ices (N=757).
www.economics-ejou nal.o g 31
5.2.1 Manu ac u ing s. se ices (H4)
In manu ac u ing (Table 5, Column 2), we ind di e ences be ween he wo
s a egies o in e na ionalisa ion FDI_RDP and FDI_DP o eigh ou o eigh een
a iables. The pa e n o hese di e gences is p ac ically he same as in he en i e
business sec o . In manu ac u ing, he ele ance o O-ad an ages seems o be
somewha s onge as we ind signi ican e ec s o some u he O- ela ed
ac o s, i.e. he “sha e o employees wi h e ia y-le el educa ion”
(“ e ia y_academic”) and “expe ience wi h o eign ac i i ies”
(“obs _expe ience”). These addi ional e ec s a e compa ible wi h he speci ic
cha ac e and he equi emen s o o eign R&D in es men s.
These indings, in combina ion wi h he esul s o Model I (see Table 4),
clea ly indica e (simila o he esul s o he en i e business sec o ) a g adual and
con inuous p ocess o in e na ionalisa ion o manu ac u ing i ms as i is
pos ula ed by he s ages iew o in e na ionalisa ion (DOMESTIC<EXPORT<
FDI_DP<FDI_RDP). The indings a e la gely consis en wi h hose o a s udy
dealing wi h he manu ac u ing sec o o he I alian economy (Cas ellani and
Zan ei 2007).
The es ima es o he se ice sec o (Table 5, Columns 3 and 4) su e om
mul icollinea i y p oblems. Due o he collinea i y be ween &d and
e ia y_academic, he coe icien o he la e a iable becomes signi ican ly
nega i e in he p esence o &d (Column 3). In es ima es wi hou &d, he a iable
e ia y_academic is insigni ican (Column 4). Also because o mul icollinea i y,
he coe icien o he a iable obs _expe ience is signi ican ly posi i e in Column
3 and becomes insigni ican in Column 4. We conside he es ima es in Column 4
as mo e alid in econome ic e ms. The e o e, ou commen s e e o hese esul s.
A compa ison be ween Column 4 and Column 2 o he able shows ha he
explana o y powe o he OLI model wi h espec o he choice be ween he wo
ypes o FDI s a egy is lowe o se ices han o manu ac u ing (wha is also
indica ed by he adjus ed R2). Mo eo e , he pa e n o explana ion subs an ially
di e ges be ween he wo sec o s. In he case o se ices, we ind s a is ically
signi ican coe icien s o FDI_RDP ( ep esen ing de ia ions om he e e ence
s a egy FDI_DP) o six o he se en een a iables co e ing all pa s o he OLI
model (wi h he excep ion o he ma ke en i onmen ), as agains eigh in he case

www.economics-ejou nal.o g 32
o manu ac u ing. Howe e , he pa e n o explana ion in e ms o he signi ican
a iables qui e s ongly di e s be ween he wo sec o s.
In he se ice sec o , he coe icien s o h ee O- a iables (sha e o employees
wi h e ia y-le el educa ion, app op iabili y, o eign expe ience) a e no longe
signi ican ; a leas he esul s o he inno a ion a iable “sales sha e o
inno a i e p oduc s” emain he same as o manu ac u ing. These di e gences
p ima ily e lec some peculia i ies o inno a ion- ela ed cha ac e is ics o se ices
such as he in ensi e use o non- echnological know-how which does no need o
be s ongly p o ec ed om compe i ion ( aci knowledge). Among he L-
(dis)ad an ages, geog aphical dis ance (obs _dis ance) and he obliga ion o
p oduce locally (obs _local_ alue) exe a signi ican in luence on he choice o
he wo s a egies only in se ices, whe eas – wha is plausible – he a iable
“insu icien en o cemen o IPRs” (obs _IPR_p o ec ion) is ele an only in
manu ac u ing (whe e R&D ac i i ies a e mo e p e alen han in se ices). The
di e ences be ween he wo sec o s wi h espec o I-ad an ages a e p obably no
so ele an as hey pe ain only o “coope a ion“, whe eas he i m size e ec is
p ac ically iden ical. Finally, in acco dance wi h manu ac u ing, he wo s a egies
o in e na ionalisa ion do no di e wi h espec o he e ec o he ma ke
en i onmen (compe i ion, demand_ end).
The “pe o mance” o he OLI model is weake o se ices no only wi h
espec o Model II (choice be ween he s a egies FDI_RDP and FDI_DP) bu , as
shown in Subsec ion 5.1, also o Model I (in pa icula wi h espec o he shi
om EXPORT o FDI; see Table 4). In se ices, he mos ele an s ep o
in e na ionalisa ion ha can be explained by he OLI app oach is he shi om
“exclusi ely domes ic ac i i ies” o “ o eign ac i i ies in gene al” (expo s and/o
FDI). The speci ic di e ences be ween expo ing and FDI (wi h o wi hou R&D),
al hough hey exis , a e clea ly less p onounced han in manu ac u ing. The pa e n
o in e na ionalisa ion o se ices i ms may hus be cha ac e ised by
DOMESTIC<EXPORT≅FDI_DP<FDI_RDP. The p ocess o in e na ionalisa ion,
hough g adual in bo h sec o s, seems o be less con inuous in se ices han in
manu ac u ing whe e i is DOMESTIC<EXPORT<FDI_DP<FDI_RDP).
To sum up, he indings (Model II) o he wo sec o s a e in line wi h
hypo hesis H4. The explana o y powe o he OLI model we applied o explain he
choice be ween wo FDI s a egies in e ms o speci ic combina ion o business
unc ions ( he mo e a - eaching one including R&D, he o he one pe aining only
www.economics-ejou nal.o g 33
o dis ibu ion and/o p oduc ion) is clea ly lowe in se ices han in
manu ac u ing. Mo eo e , he di e ences be ween he wo sec o s wi h espec o
he ela i e signi icance o he explana o y a iables o Model II a e qui e
plausible.
Mo eo e , i u ns ou ha he p ocess o in e na ionalisa ion, hough g adual
in manu ac u ing as well as in se ices, is less con inuous in he se ice sec o .
This inding, which is based on es ima es o Model I and II, is no su p ising in
iew o p e ious (mos ly heo e ical o in e iew-based) esea ch, which shows
ha o some se ice companies expo ing may be he bes op ion o s a ing
in e na ionalisa ion whe eas o o he s a di ec p esence ab oad is op imal (see,
e.g., Ca man and Langea d 1980; Boddewyn e al. 1986; Bell 1995; G ön oos,
1999). Hence, he e migh be no s a egy o in e na ionalisa ion o se ices ha is
gene ally supe io , wha is consis en wi h ou esul s which imply ha X≅FDI.
Econome ic e idence p o ided by Wagne (2014) also suppo s he iew o a less
g adual and con inuous p ocess o in e na ionalisa ion in se ices han in
manu ac u ing. Applying he model o i m he e ogenei y o he se ice sec o , he
e en inds ha , in se ices, expo e s a e mo e p oduc i e han i ms wi h FDI
(implying ha in e na ionalisa ion ollows he pa h D<FDI<X).
6 Summa y and conclusions
Econome ic esea ch dealing wi h he in e na ionalisa ion o i ms s ill ocuses on
manu ac u ing. As he cha ac e is ics o se ices and goods di e in se e al
espec s, one may expec ha he de e minan s o he i ms’ in e na ional ac i i ies
a e no he same o he wo sec o s. Howe e , he e is ha dly any empi ical i m-
le el e idence on whe he his p oposi ion is co ec . The e o e, we i s aimed a
iden i ying econome ically he ac o s de e mining why i ms in e na ionalise
hei ac i i ies and why hey choose a speci ic s a egy o in e na ionalisa ion
(expo ing s. FDI). We hen asked (wha is a he co e o ou in e es ) whe he he
de e minan s o hese wo ways o going in e na ional di e be ween
manu ac u ing and se ices. Second, we analysed (possible) di e ences be ween
speci ic o ms o FDI in e ms o combina ions o business unc ions, again
con as ing he wo sec o s. We used he well-known OLI model as heo e ical
www.economics-ejou nal.o g 34
backg ound o he empi ical analysis, which is based on a la ge i m-le el da ase
co e ing he Swiss business sec o .
We speci ied wo models which we es ima ed o he en i e business sec o
and, sepa a ely, o manu ac u ing and se ices. The i s one (“INT_p opensi y”)
de e mines he p obabili y o a company o belonging o one o he ollowing
ca ego ies o i ms: a) “selling on domes ic ma ke s only”, b) “se ing,
addi ionally, expo ma ke s” and, c) “o sho ing”. The second model
(“INT_ unc ion”) ocuses on in e na ionalised companies and de e mines he
p obabili y o a i m o go in e na ional by means o a) “se ing expo ma ke s”,
b) “o sho ing o dis ibu ion and/o p oduc ion”, and c) “o sho ing o R&D, in
addi ion o dis ibu ion and/o p oduc ion”.
The es ima es o he wo models a e la gely in line wi h ou hypo heses.
Fi s ly, we ind ha he OLI model is well sui ed o explaining why i ms
in e na ionalise hei ac i i ies as expo e s o , al e na i ely, by means o
o sho ing (p opensi y o in e na ionalise). This holds ue in pa icula o he
business sec o as a whole and o manu ac u ing, whe eas, as hypo hesised, he
explana o y powe o he OLI model is lowe in he case o se ices. Secondly, he
OLI model also allows o explaining di e ences be ween wo speci ic o ms o
o sho ing in e ms o (combina ions o ) business unc ions, i.e. “o sho ing o
dis ibu ion and/o p oduc ion” s. “o sho ing o R&D, in addi ion o dis ibu ion
and/o p oduc ion”. This p ima ily holds ue o manu ac u ing bu ends o be he
case also o he se ice sec o . Thi d, he es ima es con as ing he manu ac u ing
and he se ice sec o yield di e ences wi h espec o he ela i e impo ance o
he indi idual explana o y a iables ha (mos ly) a e economically plausible; his
is ue o he model explaining he choice be ween expo ing and FDI as well as
he choice o a speci ic FDI s a egy in e ms o business unc ions. Fou h, he
es ima es o bo h models seem o be consis en wi h he s ages iew o
in e na ionalisa ion, in pa icula in he manu ac u ing sec o bu , o a lesse
ex en , also in he se ice sec o whe e he p ocess o in e na ionalisa ion,
howe e , is less con inuous han in manu ac u ing.
Conside ing he scope and indings o he analysis and gi en he lack o
s udies dealing wi h he opic o his pape , we subs an ially add o exis ing
knowledge ega ding he de e minan s o he in e na ionalisa ion o i m ac i i y.
In pa icula , he pape yields new insigh s by sys ema ically con as ing es ima es
o manu ac u ing and se ices i ms, as well as by in es iga ing he d i e s o
www.economics-ejou nal.o g 35
di e en o ms o in e na ional ac i i ies in e ms o (combina ions o ) business
unc ions. The analysis shows ha manu ac u ing and se ices companies
subs an ially di e wi h espec o he ac o s de e mining he p opensi y o
in e na ionalisa ion as a whole as well as di e en ia ed by business unc ion.
Al hough he explana o y powe o he OLI model is lowe o se ices han o
manu ac u ing i emains an adequa e amewo k o analysis o bo h sec o s.
Fu he mo e, i u ns ou ha he d i e s o in e na ionalisa ion p ima ily e lec
i m-speci ic beha iou whe eas indus y-speci ic ac o s (which a e emphasised
in p e ious wo k) a e o mino impo ance.
The s udy has a numbe o limi a ions. A i s one e e s o he speci ica ion o
he OLI model. The measu emen o I-ad an ages (which is di icul anyway) is
no e y sa is ac o y, p ima ily due o de iciencies o he da abase. As a
consequence, he empi ical indings, in he i s place, con i m he OL-pa o he
OLI model (al hough, in gene al, he I- a iables also yielded he expec ed esul s).
Fu he esea ch could also help o imp o e o he elemen s o he OLI model. Fo
example, i would be bene icial o ex end he O-pa , o example by including
inancial a iables. Secondly, due o he c oss-sec ion na u e o he da a, he
indings ha e o be in e p e ed as condi ional co ela ions a he han as causal
ela ionships; ne e heless, i is s ill possible o assess whe he he empi ical
esul s a e consis en wi h he pos ula ed hypo heses. As a consequence,
econome ic s udies making use o longi udinal da a would be highly welcome.
Such wo k would be mo e adequa e o analyse he dynamics o in e na ionalisa ion
(e.g., he s ages iew o in e na ionalisa ion).
www.economics-ejou nal.o g 36
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