Firm's characteristics, public support and foreign direct investment

Abstract

Firms competencies and needs may determine movements to foreign locations. Firms may use their own resources to establish or maintain activities of foreign direct investment, or otherwise when internal resources are insu cient they may apply for external support provided by governments. With a binary probit model applied on a recent survey, a Bayesian lter calculates the probability of a given characteristic's and use of public support contributing to the existence of foreign direct investment. The results show that some characteristics like the size, labour productivity, age, and domestic ownership, have a noticeable e ect on the existence of foreign direct investment. In terms of use of public support, there is evidence that measures that promote informational services, scal bene ts, and protocols between governmental agencies and banks have positive e ects on existence of foreign direct investment. This study may add useful information to help scholars and policy makers to understand competencies that rms need to operate abroad either rooted internally or externally.