Skip to main content
SpringerLink
Log in

The Hassle Factor: An Explanation for Managerial Locational Shunning

  • Chapter
Location of International Business Activities

Abstract

This study investigates the widely overlooked phenomenon of multinational enterprise (MNE) location avoidance, utilizing a multi-method research design and data on 131 foreign investment locations. It complements economic-choice-based location research by adding contextual dimensions at the country level that matter to managers personally, and affect decisions at the firm level. We provide a connection between international business research, the behavioral stream in economic geography, and the microfoundations stream in the strategic management literature. The results suggest that, in addition to traditional location choice criteria (including investment potential, internationalization strategy, and various geographic and psychic distances), foreign location decisions in MNEs are influenced by how troublesome it is for managers to travel to or live in certain places. An 11-item measure composed of travel inconveniences shows a significant negative moderating effect on the relationship between foreign direct investment potential and investment intensity. The effect is stronger for non-resource-seeking industries. We call this phenomenon the “hassle factor”.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 16.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 54.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Aharoni, Y. 1966. How to market a country. Columbia Journal of World Business, 1(2): 41–49.

    Google Scholar 

  • Aharoni, Y. 2010. Behavioral elements in foreign direct investment decisions. In T. Devinney, T. Pederson, & L. Tihanyi (Eds), The past, present and future of international business and management, Advances in International Management, Vol. 23, 72–112. Bingley: Emerald Group.

    Google Scholar 

  • Aiken, L., & West, S. 1991. Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.

    Google Scholar 

  • Anderson, J., & Gerbing, D. 1988. Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3): 411–439.

    Article  Google Scholar 

  • Barclay, D., Higgins, C., & Thompson, R. 1995. The partial least squares (PLS) approach to causal modeling: Personal computer adoption and use as an illustration. Technology Studies, 2(2): 285–309.

    Google Scholar 

  • Barnes, T., & Sheppard, E. 1992. Is there a place for the rational actor? A geographical critique of the rational choice paradigm. Economic Geography, 68(1): 1–15.

    Article  Google Scholar 

  • Bathelt, H., Malmberg, A., & Maskell, P. 2004. Clusters and knowledge: Local buzz, global pipelines and the process of knowledge creation. Progress in Human Geography, 28(1): 31–56.

    Article  Google Scholar 

  • Beckerman, W. 1956. Distance and the pattern of intra-European trade. Review of Economics and Statistics, 38(1): 31–40.

    Article  Google Scholar 

  • Beugelsdijk, S., McCann, P., & Mudambi, R. 2010. Introduction: Place, space and organization — economic geography and the multinational enterprise. Journal of Economic Geography, 10(4): 485–493.

    Article  Google Scholar 

  • Birkinshaw, J., Morrison, A., & Hulland, J. 1995. Structural and competitive determinants of a global integration strategy. Strategic Management Journal, 16(8): 637–655.

    Article  Google Scholar 

  • Blonigen, B. 2005. A review of the empirical literature on FDI determinants. Atlantic Economic Journal, 33(4): 383–403.

    Article  Google Scholar 

  • Boeh, K., & Beamish, P. 2012. Travel time and the liability of distance in foreign direct investment: Location choice and entry mode. Journal of International Business Studies, 43(5): 525–535.

    Article  Google Scholar 

  • Brouthers, L., Brouthers, K., & Werner, S. 1999. Is Dunning’s eclectic framework descriptive or normative? Journal of International Business Studies, 30(4): 831–844.

    Article  Google Scholar 

  • Buckley, P., & Casson, M. 1976. The future of the multinational enterprise. London: Palgrave Macmillan.

    Book  Google Scholar 

  • Buckley, P., Devinney, T., & Louviere, J. 2007. Do managers behave the way theory suggests? A choice-theoretic examination of foreign direct investment location decision-making. Journal of International Business Studies, 38(7): 1069–1094.

    Article  Google Scholar 

  • Central Intelligence Agency. 2008. The world factbook. http://www.cia.gov/cia/publications/factbook/index.html, accessed 1 March 2008.

    Google Scholar 

  • Child, J. 2000. Theorizing about organization cross-nationally. In J.L.C. Cheng & R.B. Peterson (Eds), Advances in International Comparative Management, Vol. 13. Stamford, CT: JAI Press.

    Google Scholar 

  • Child, J. 2009. Context, comparison, and methodology in Chinese management research. Management and Organization Review, 5(1): 57–73.

    Article  Google Scholar 

  • Clark, G., & Strauss, K. 2007. Human nature, the context of decision-making, and the methods of a new economic geography. American Association of Geographers. Version 5, http://www.geog.ox.ac.uk/research/transformations/wpapers/wpg07–07.pdf, accessed 21 March 2013.

    Google Scholar 

  • Cohen, J., Cohen, P., West, S. G., & Aiken, L. 2003. Applied multiple regression/correlation analysis for the behavioral sciences. Mahwah, NJ: Lawrence Erlbaum Associates.

    Google Scholar 

  • Collier, P., & Hoeffler, A. 2005. Resource rents, governance, and conflict. Journal of Conflict Resolution, 49(4): 625–633.

    Article  Google Scholar 

  • Curry, J., & Dalpino, N. 2008. Global road warrior, (4th edn). Petaluma, CA: World Trade Press.

    Google Scholar 

  • Dai, L., Eden, L., & Beamish, P. W. 2013. Place, space and geographical exposure: Foreign subsidiary survival in conflict zones. Journal of International Business Studies, advance online publication, 18 April; doi: 10.1057/jibs.2013.12.

    Google Scholar 

  • DeFrank, R. S., Konopaske, R., & Ivancevich, J. M. 2000. Executive travel stress: Perils of the road warrior. Academy of Management Executive, 14(2): 278–293.

    Google Scholar 

  • Delios, A., & Beamish, P. 1999. Geographic scope, product diversification, and the corporate performance of Japanese firms. Strategic Management Journal, 20(8): 711–727.

    Article  Google Scholar 

  • Devinney, T., Midgley, D., & Venaik, S. 2003. Managerial beliefs, market contestability and dominant strategic orientation in the eclectic paradigm. In R. Narula & J. Cantwell (Eds), International business and the eclectic paradigm. London: Routledge.

    Google Scholar 

  • Dunning, J. 1988. The eclectic paradigm of international production: A restatement and some possible extensions. Journal of International Business Studies, 19(1): 1–31.

    Article  Google Scholar 

  • Dunning, J. 1998. Location and the multinational enterprise: A neglected factor? Journal of International Business Studies, 29(1): 45–66.

    Article  Google Scholar 

  • Dunning, J. 2000. The eclectic paradigm as an envelope for economic and business theories of MNE activity. International Business Review, 9(2): 163–190.

    Article  Google Scholar 

  • Dunning, J. 2009. Location and the multinational enterprise: John Dunning’s thoughts on receiving the Journal of International Business Studies 2008 Decade Award. Journal of International Business Studies, 40(1): 20–34.

    Article  Google Scholar 

  • Eden, L., & Miller, S. 2004. Distance matters: Liability of foreignness, institutional distance, and ownership strategy. In M.A. Hitt & J.L.C. Cheng (Eds), Theories of the multinational enterprise: Diversity, complexity and relevance (Advances in International Management, Vol. 16): 187–221. Bingley, UK: Emerald Group Publishing Limited.

    Chapter  Google Scholar 

  • Erez, M., & Earley, P. 1993. Culture, self-identity and work. New York: Oxford University Press.

    Book  Google Scholar 

  • Eisenhardt, K. 1989. Agency theory: An assessment and review. Academy of Management Review, 14(1): 57–74.

    Google Scholar 

  • Felin, T., & Foss, N. 2005. Strategic organization: A field in search of microfoundations. Strategic Organization, 3(4): 441–455.

    Article  Google Scholar 

  • Fomell, C., & Larcker, D. 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1): 39–50.

    Article  Google Scholar 

  • Galan, J., & Gonzalez-Benito, J. 2006. Distinctive determinant factors of Spanish foreign direct investment in Latin America. Journal of World Business, 41(2): 171–189.

    Article  Google Scholar 

  • Galan, J., Gonzalez-Benito, J., & Zuñiga-Vincente, J. 2007. Factors determining the location decisions of Spanish MNEs: An analysis based on the investment development path. Journal of International Business Studies, 38(6): 975–997.

    Article  Google Scholar 

  • Garnaut, R., & Ross, A. C. 1975. Uncertainty, risk aversion and the taxing of natural resource projects. The Economic Journal, 85(338): 272–287.

    Article  Google Scholar 

  • Gaur, A., Delios, A., & Singh, K. 2007. Institutional environments, staffing strategies, and subsidiary performance. Journal of Management, 33(4): 611–636.

    Article  Google Scholar 

  • Ghemawat, P. 2001. Distance still matters: The hard reality of global expansion. Harvard Business Review, 79(8): 137–147.

    Google Scholar 

  • Gong, Y. 2003. Subsidiary staffing in multinational enterprises: Agency, resources, and performance. Academy of Management Journal, 46(6): 728–739.

    Article  Google Scholar 

  • Hakanson, L., & Ambos, B. 2010. The antecedents of psychic distance. Journal of International Management, 16(2): 195–210.

    Article  Google Scholar 

  • Hambrick, D., & Mason, P. 1984. Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2): 193–206.

    Google Scholar 

  • Hanson, S. 2006. Thinking back, thinking ahead: Some questions for economic geographers. In S. Bagchi-Sen & H. Lawton Smith (Eds), Economic geography: Past, present and future. London: Routledge.

    Google Scholar 

  • Henisz, W. 2000. The institutional environment for economic growth. Economics and Politics, 12(1): 1–31.

    Article  Google Scholar 

  • Heritage Foundation. 2012. Index of economic freedom, http://www.heritage.org/index, accessed 13 July 2012.

    Google Scholar 

  • Herrmann, P., & Datta, D. 2006. CEO experiences: Effects on the choice of FDI entry mode. Journal of Management Studies, 43(4): 755–778.

    Article  Google Scholar 

  • Hitt, M. A., Beamish, P. W., Jackson, S. E., & Mathieu, J. 2007. Building theoretical and empirical bridges across levels: Multilevel research in management. Academy of Management Journal, 50(6): 1385–1399.

    Article  Google Scholar 

  • Hofstede, G. 1983. The cultural relativity of organizational practices and theories. Journal of International Business Studies, 14(2): 75–89.

    Article  Google Scholar 

  • Holstein, J., & Gubrium, J. 1995. The active interview. London: Sage.

    Book  Google Scholar 

  • Hoskisson, R., Hitt, M., Johnson, R., & Moesel, D. 1993. Construct validity of an objective (entropy) categorical measure of diversification strategy. Strategic Management Joumal, 14(3): 215–235.

    Article  Google Scholar 

  • Hosseini, H. 2005. An economic theory of FDI: A behavioral economics and historical approach. Journal of Socio-Economics, 34(4): 528–541.

    Article  Google Scholar 

  • Hsu, S., Chen, W., & Hsieh, M. 2006. Robustness testing of PLS, LISREL, EQS and ANN-based SEM for measuring customer satisfaction. Total Quality Management and Business Excellence, 17(3): 355–372.

    Article  Google Scholar 

  • Hulland, J. 1999. Use of partial least squares (PLS) in strategic management research: A review of four recent studies. Strategic Management Journal, 20(2): 195–204.

    Article  Google Scholar 

  • Hymer, S. 1960. The international operations of national firms. Cambridge, MA: MIT Press.

    Google Scholar 

  • Japanese Ministry of Finance. 2007. Foreign direct investment, http://www.mof.go.jp/english/international_policy/reference/itn_transactions_in_securities/fdi/index.htm, accessed 25 May 2008.

    Google Scholar 

  • Jarzabkowski, P. 2004. Strategy as practice: Recursiveness, adaptation and practicesin-use. Organization Studies, 25(4): 529–560.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J. 1977. The internationalization process of the firm: A model of knowledge development and increasing foreign markets commitments. Journal of International Business Studies, 8(1): 23–32.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J. 2009. The Uppsala internationalization process revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9): 1411–1431.

    Article  Google Scholar 

  • Johanson, J., & Wiedersheim-Paul, F. 1975. The internationalization of the firm: Four Swedish cases. Journal of Management Studies, 12(3): 305–322.

    Article  Google Scholar 

  • Kahneman, D. 2003. Maps of bounded rationality: Psychology for behavioral economics. American Economic Review, 93(5): 1449–1475.

    Article  Google Scholar 

  • Kahneman, D., Schwartz, A., Thaler, R., & Tversky, A. 1997. The effect of myopia and loss aversion on risk taking: An experimental test. Quarterly Journal of Economics, 112(2): 647–661.

    Article  Google Scholar 

  • Kogut, B., & Singh, H. 1988. The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3): 411–432.

    Article  Google Scholar 

  • Kostova, T. 1996. Success of the transnational transfer of organizational practices within multinational companies, Unpublished PhD Dissertation, University of Minnesota, Minnesota, MN.

    Google Scholar 

  • Lewis, M. 1998. Iterative triangulation: A theory development process using existing case studies. Journal of Operations Management, 16(4): 455–469.

    Article  Google Scholar 

  • Lorenzen, M., & Mudambi, R. 2012. Clusters, connectivity and catch-up: Bollywood and Bangalore in the global economy. Journal of Economic Geography, Advance access 25 July. doi:10.1093/jeg/lbs017.

    Google Scholar 

  • McCormack, M. 1996. What they don’t teach you at Harvard Business School about executive travel. West Hollywood: Dove Books.

    Google Scholar 

  • McElroy, J., Tarlow, P., & Carlisle, K. 2007. Tourist harassment: Review of the literature and destination responses. International Journal of Culture, Tourism and Hospitality Research, 1(4): 305–314.

    Article  Google Scholar 

  • Mehlum, H., Moene, K., & Torvik, R. 2006. Cursed by resources or institutions? The World Economy, 29(8): 1117–1131.

    Article  Google Scholar 

  • Merchant International Group. 2008. Strategic research and corporate intelligence. http://www.merchant-international.co.uk, accessed 21 March 2013.

    Google Scholar 

  • Miller, B. 1992. Collective action and rational choice: Place, community, and the limits to individual self-interest. Economic Geography, 68(1): 10–23.

    Article  Google Scholar 

  • Mudambi, R. 1995. The MNE investment location decision: Some empirical evidence. Managerial and Decision Economics, 16(3): 249–257.

    Article  Google Scholar 

  • Mudambi, R., & Navarra, P. 2003. Political tradition, political risk and foreign direct investment in Italy. Management International Review, 43(3): 247–265.

    Google Scholar 

  • Nachum, L., & Zaheer, S. 2005. The persistence of distance? The impact of technology on MNE motivations for foreign investment. Strategic Management Journal, 26(8): 747–767.

    Article  Google Scholar 

  • Narula, R. 1996. Multinational investment and economic structure. London: Routledge.

    Google Scholar 

  • Nebus, J., & Chai, K. 2013. Putting the “psychic” back in psychic distance: Awareness, perceptions, and understanding as dimensions of psychic distance. Journal of International Management, in press; doi: 10.1016/j.intman.2013. 01.001.

    Google Scholar 

  • Nielsen, B., & Nielsen, S. 2011. The role of top management team international orientation in international strategic decision-making: The choice of foreign entry mode. Journal of World Business, 46(2): 185–193.

    Article  Google Scholar 

  • OAG (Official Airline Guide). 2008. http://oag.com. accessed 5 March 2008.

  • OECD. 2008. For a better world economy. Paris: Organization for Economic Cooperation and Development.

    Google Scholar 

  • Pouder, R., & St John, C. H. 1996. Hot spots and blind spots: Geographical clusters of firms and innovation. Academy of Management Review, 21(4): 1192–1225.

    Google Scholar 

  • Powell, T., Lovallo, D., & Fox, C. 2011. Behavioral strategy. Strategic Management Journal, 32(13): 1369–1386.

    Article  Google Scholar 

  • Pred, A. 1967. Behavior and location: Foundations for a geographic and dynamic location theory. Lund: C.W.K Gleerup.

    Google Scholar 

  • Punnett, B., & Shenkar, O. 2004. Handbook for international management research. Ann Arbor: University of Michigan Press.

    Google Scholar 

  • Rabin, M. 1998. Psychology and economics. Journal of Economic Literature, 36(1): 11–46.

    Google Scholar 

  • Raturi, A., & Jack, E. 2006. Lessons learned from methodological triangulation in management research. Management Research News, 29(6): 345–357.

    Article  Google Scholar 

  • Reiljan, J., Reiljan, E., & Andresson, K. 2001. Attractiveness of central and Eastern European countries for foreign direct investment in the context of European integration: The case of Estonia. Paper presented at 41st ERSA Congress, Zagreb.

    Google Scholar 

  • Ringle, C., Wende, S., & Will, A. 2005. SmartPLS. 2.0 (beta) ed. Hamburg: University of Hamburg.

    Google Scholar 

  • Rodriguez, C., Gomez, C., & Ferreiro, J. 2009. A proposal to improve the UNCTAD’s inward FDI potential index. Transnational Corporations, 18(3): 85–114.

    Google Scholar 

  • Rousseau, D. M. 1985. Issues of level in organizational research: Multi-level and cross-level perspectives. In L.L. Cummings & B.M. Staw (Eds), Research in organizational behavior, Vol. 7. Greenwich, CT: JAI Press.

    Google Scholar 

  • Sachwald, F. 1995. Japanese firms in Europe. Luxembourg: Harwood Academic Publishers.

    Google Scholar 

  • Samuelson, W., & Zeckhauser, R. 1988. Status quo bias in decision making. Journal of Risk and Uncertainty, 1(1): 7–59.

    Article  Google Scholar 

  • Scandura, T., & Williams, E. 2000. Research methodology in management: Current practices, trends, and implications for future research. Academy of Management Joumal, 43(6): 1248–1264.

    Article  Google Scholar 

  • Schotter, A., & Beamish, P. W. 2011. Performance effects of MNC head-quarters-subsidiary conflict and the role of boundary spanners: The case of headquarter initiative rejection. Journal of International Management, 17(3): 243–259.

    Article  Google Scholar 

  • Simon, H. 1956. Rational choice and the structure of the environment. Psychology Review, 63(2): 129–138.

    Article  Google Scholar 

  • Slangen, A., & Beugelsdijk, S. 2010. The impact of institutional hazards on foreign multinational activity: A contingency perspective. Journal of International Business Studies, 41(6): 980–995.

    Article  Google Scholar 

  • Smith, G. 2007. Travelindependent. http://www.travelindependent.info, accessed 5 December 2007.

    Google Scholar 

  • Strauss, K. 2008. Re-engaging with rationality in economic geography: Behavioural approaches and the importance of context in decision-making. Journal of Economic Geography, 8(2): 137–156.

    Article  Google Scholar 

  • Tenenhaus, M., Vinzi, V., Chatelin, Y., & Lauro, C. 2005. PLS path modeling. Computational Statistics and Data Analysis, 48(1): 159–205.

    Article  Google Scholar 

  • Toyo Keizai. 2007. Kaigai Shinshutsu Kigyo Souran-kuni Betsu. Tokyo: Toyo Keizai.

    Google Scholar 

  • Transparency International. 2012. Corruption perception index. http://www.transparency.org/cpi2011, accessed 21 March 2013.

    Google Scholar 

  • Tsang, E. 2002. Sharing international joint venturing experience: A study of some key determinants. Management International Review, 42(2): 183–206.

    Google Scholar 

  • Tversky, A., & Kahneman, D. 1991. Loss aversion in riskless choice: A reference dependent model. Quarterly Journal of Economics, 106(4): 1039–1061.

    Article  Google Scholar 

  • UNCTAD. 2007. Inward FDI potential index2002–2004. New York: United Nations.

    Google Scholar 

  • Van de Laar, M., & de Neubourg, C. 2006. Emotions and foreign direct investment: A theoretical and empirical exploration. Management International Review, 46(2): 207–233.

    Article  Google Scholar 

  • Venaik, S., Midgley, D., & Devinney, T. 2005. Dual paths to performance: The impact of global pressures on MNC subsidiary conduct and performance. Journal of International Business Studies, 36(6): 655–675.

    Article  Google Scholar 

  • Venkatraman, N., & Grant, J. 1986. Construct measurement in organizational strategy research: A critique and proposal. Academy of Management Review, 11(1): 71–87.

    Google Scholar 

  • Vernon, R. 1966. International investment and international trade in the product cycle. Quarterly Journal of Economics, 80(2): 190–207.

    Article  Google Scholar 

  • Wells, L., & Mint, A. 2000. Marketing a country: Promotion as a tool for attracting foreign investment, (revised edn). Foreign Investment Advisory Service — Occasional papers, 13.

    Google Scholar 

  • Williamson, O. E. 1981. The economics of organization: A transaction cost approach. American Journal of Sociology, 87(3): 548–577.

    Article  Google Scholar 

  • World Bank. 1994. Expanding the measure of wealth: Indicators of environmentally sustainable development, Environmentally Sustainable Development Studies and Monographs Series No. 7, World Bank, Washington DC.

    Google Scholar 

  • World Economic Forum. 2007. The global competitiveness index 2004–2005. Geneva: World Economic Forum.

    Google Scholar 

  • World Health Organization. 2008. WHO statistical information system. http://www.who.int/whosis/en/index.html, accessed 5 March 2008.

    Google Scholar 

  • Yung, K. 2002. Value of multinationality: Internalization, managerial self-interest, and managerial compensation. Journal of Business Finance and Accounting, 29(1–2): 55–75.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Thunderbird School of Global Management, Glendale, USA

    Andreas Schotter

  2. Ivey Business School, Western University, Canada

    Paul W. Beamish

Authors
  1. Andreas Schotter
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Paul W. Beamish
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Rutgers University, Newark, NJ, USA

    John Cantwell

Copyright information

© 2014 Journal of International Business Studies

About this chapter

Cite this chapter

Schotter, A., Beamish, P.W. (2014). The Hassle Factor: An Explanation for Managerial Locational Shunning. In: Cantwell, J. (eds) Location of International Business Activities. Palgrave Macmillan, London. https://doi.org/10.1057/9781137472311_7

Download citation

Publish with us

Policies and ethics

Search

Navigation