Department of Business and Economic, University of Pecs, Pecs Hungary
Objective: The research objective is to discover associations between factors likely to have an influence on multinational corporations’ foreign direct investment in Jordan. The scope of the research and its objectives are driven by, first and foremost, the fact that there is increasing interest in MNCs’ investments in the MENA region and particularly in Jordan, and second there is a lack of academic research jointly examining the factors behind locational decisions. Research Design & Methods: This study has adopted quantitative methods (non-experimental) because we are able to measure the relationship between the set of variables and set of score. The study designed based on of international business literatures that includes economic, legal, social political factors. Questionnaire survey used to collect that data from sample of 50 companies in operate in Jordan and either owned by foreign inventors or are subsidiary of multinational companies. Findings: the study results indicate mixed views among MNCs because of the current situation and our research results demonstrate that MNCs’ location decision is immensely influenced by economic and political factors, and less by both legal and cultural factors. This indicates there is a similarity with other neighboring countries and significant difference from developed economies western countries. In addition, research finding also indicates that some MNCs mitigating their risk exposure by shifting their investments to relatively more stable business environments, such as the Gulf region and Jordan compared with other Levant countries as confirmed by the FT 2014. Implications & Recommendations: The finding of this research indicate that policy maker in Jordan should concentrate on supporting the macroeconomic environment and maintain its political stability to continue attract FDI. Contribution & Value Added: The existing MNC theory did not jointly examine the factors influencing location decisions, given the scarcity of national publications in the field of international business in Jordan, this research aims at enriching the national literature in this field.
Keywords: multinational companies, international business, foreign direct investment, location factors.
JEL Classification: F21, F23.
Cite as: Tahat, I.A.M. (2022). Association Between Factors Likely to Have an Influence on Foreign Direct Investment: The Case of Jordan. SocioEconomic Challenges, 6(4), 34-45. https://doi.org/10.21272/sec.6(4).34-45.2022
This work is licensed under a Creative Commons Attribution 4.0 International License
- de Mooij, R. and Ederveen, S. (2006). What a Difference Does it Make? Available at: [Link].
- Argyle, M. (2000). psychology and religion. London UK: Routledge. [Link].
- Barassi, M.R. and Zhou, Y. (2012). The effect of corruption on FDI: A parametric and non-parametric analysis. European Journal of Political Economy, 28(3), 302–312. [CrossRef].
- Belderbos, R. and Zou, J. (2009). Real Options and Foreign Affiliate Divestments: A Portfolio Perspective on JSTOR. [Link].
- Bellak, C. and Leibrecht, M. (2009). Do low corporate income tax rates attract FDI? – Evidence from Central- and East European countries. Applied Economics, 41(21), 2691–2703. [CrossRef].
- Bellak, C., Leibrecht, M. and Riedl, A. (2008). Labour costs and FDI flows into Central and Eastern European Countries: A survey of the literature and empirical evidence. Structural Change and Economic Dynamics, 19(1), 17–37. [CrossRef].
- Bijsterbosch, M. and Kolasa, M. (2009). FDI and Productivity Covergence in Central and Eastern Europe: An Industry-Level Investigation. [Link].
- Brooks, D.H., Roland-Holst, D. and Zhai, F. (2008). Behavioral and empirical perspectives on FDI: International capital allocation across Asia. Journal of Asian Economics, 19(1), 40–52. [CrossRef].
- Bryman, A. (2006). Integrating quantitative and qualitative research: How is it done? Qualitative Research, 6(1), 97–113. [CrossRef].
- Busse, M. and Hefeker, C. (2007). Political risk, institutions and foreign direct investment. European Journal of Political Economy, 23(2), 397–415. [CrossRef].
- Caves, R.E. (1993). Multinational enterprise and economic analysis. Cambridge; New York: Cambridge University Press. [Link].
- Chan, Y. and John Wei, K.C. (1996). Political risk and stock price volatility: The case of Hong Kong. Pacific-Basin Finance Journal, 4(2-3), 259–275. [CrossRef].
- Chatterjee, S. (1992). Sources of value in takeovers: Synergy or restructuring–implications for target and bidder firms. Strategic Management Journal, 13(4), 267–286. [CrossRef].
- Cheng, L.K. and Kwan, Y.K. (2000). What are the determinants of the location of foreign direct investment? The Chinese experience. Journal of International Economics, 51(2), 379–400. [CrossRef].
- Crabtree, S. (2010). Religiosity Highest in World’s Poorest Nations. [Link].
- Creswell, J.W. (2014). Research Design: qualitative, quantitative, and Mixed Methods Approaches. Thousand Oaks, California: Sage Publications, Inc. [Link].
- Crotty, M. (1998). The foundations of social research: meaning and perspective in the research process. London: Sage. [Link].
- Datta, D.K. (1991). Organizational Fit and Acquisition Performance: Effects of Post-Acquisition Integration. Strategic Management Journal, 12(4), 281–297. [Link].
- Dunning, J.H. (1981). Location and the Multinational Enterprise: A Neglected Factor? Journal of International Business Studies, 29(1), 45–66. [CrossRef].
- Dunning, J.H. (2003). The Eclectic (OLI) Paradigm of International Production: Past, Present and Future. International Journal of the Economics of Business, 8(2), 173–190. [CrossRef].
- Dunning, J.H. (11988). Explaining international production by John H. Dunning. (London, Unwin Hyman, 1988, pp. 378, £14.95 p/b.). Journal of International Development, 4(6), 655–655. [CrossRef].
- Erramilli, M.K. (1991). The Experience Factor in Foreign Market Entry Behavior of Service Firms. Journal of International Business Studies, 22(3), 479–501. [CrossRef].
- Fielding, D. (2003). Modelling Political Instability and Economic Performance: Israeli Investment during the Intifada. Economica, 70(277), 159–186. [CrossRef].
- Fowler, F.J. (2014). Survey research methods. 5th ed. London: Sage Publication, Cop. [Link].
- Gorg, H. (2005). Fancy a Stay at the ‘Hotel California’? The Role of Easy Entry and Exit for FDI. Kyklos, 58(4), 519–535. [CrossRef].
- Haaland, J.I. and Wooton, I. (2002). Multinational Investment, Industry Risk and Policy Competition. [Link].
- Henisz, W.J. (2000). The Institutional Environment for Multinational Investment. Journal of Law, Economics, & Organization, 16(2), 334–364. [Link].
- Hoffmann, R. (2012). The experimental economics of religion. Journal of Economic Surveys, 27(5). [CrossRef].
- Hofstede, G. (1984). Culture’s consequences: International differences in work-related values. Beverly Hills: Sage Publications. [Link].
- Jakobsen, J. and de Soysa, I. (2006). Do Foreign Investors Punish Democracy? Theory and Empirics, 1984-2001. Kyklos, 59(3), 383–410. [CrossRef].
- Jensen, N.M. (2003). Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment. International Organization, 57(3), 587–616. [CrossRef].
- Johanson, J. and Vahlne, J. (1990). The Mechanism of Internationalisation. International Marketing Review, 7(4). [CrossRef].
- Johanson, J. and Vahlne, J.-E. (1977). The Internationalization Process of the Firm — A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8(1), 23–3. [Link].
- Jones, G. (1996). The evolution of international business: an introduction. London; New York: Routledge. [Link].
- Kessapidou, S. and Varsakelis, N.C. (2002). The impact of national culture on international business performance: the case of foreign firms in Greece. European Business Review, 14(4), 268–275. [CrossRef].
- Kneller, R., Pisu, M. and Yu, Z. (2008). Overseas business costs and firm export performance. Canadian Journal of Economics/Revue canadienne d’économique, 41(2), 639–669. [CrossRef].
- Kumar, V. (2008). A Critical review of economic analyses of religion. [Link].
- Kutan, A.M. and Zhou, S. (1993). Political turmoil and financial market behaviour in reforming market-oriented economies: the case of Poland. Applied Economics, 25(6), 759–763. [CrossRef].
- Lee, B. and Powell, J. (1999). Valuation of Foreign Direct Investment in the Presence of Political Risk. Faculty of Business – Economics Working Papers. [Link].
- Lee, S.-H. and Song, S. (2012). Host country uncertainty, intra-MNC production shifts, and subsidiary performance. Strategic Management Journal, 33(11), 1331–1340. [CrossRef].
- Lensink, R. and Morrissey, O. (2006). Foreign Direct Investment: Flows, Volatility, and the Impact on Growth*. Review of International Economics, 14(3), 478–493. [CrossRef].
- Li, Q. and Resnick, A. (2003). Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries. International Organization, 57(01). [CrossRef].
- Miller, K.D. and Reuer, J.J. (1998). Firm Strategy and Economic Exposure to Foreign Exchange Rate Movements. Journal of International Business Studies, 29(3), 493–513. [CrossRef].
- Morosini, P., Shane, S. and Singh, H. (1998). National Cultural Distance and Cross-Border Acquisition Performance. Journal of International Business Studies, 29(1), 137–158. [CrossRef].
- Neelankavil, J.P. (2015). International Business Research. Routledge. [Link].
- Olson, M. (1993). Dictatorship, Democracy, and Development. American Political Science Review, 87(3), 567–576. [CrossRef].
- Pantzalis, C., Park, J.C. and Sutton, N.K. (2008). Legal environment, internalization, and U.S. acquirer gains in foreign takeovers. Journal of Financial Research, 31(2), 167–191. [CrossRef].
- Pantzalis, C., Simkins, B.J. and Laux, P.A. (2001). Operational hedges and the foreign exchange – ProQuest. [Link].
- Paul, J. and Feliciano-Cestero, aría M. (2020). Five decades of research on foreign direct investment by MNEs: An overview and research agenda. Journal of Business Research. [online]. [CrossRef].
- Rossi, S. and Volpin, P.F. (2004). Cross-country determinants of mergers and acquisitions. Journal of Financial Economics, 74(2), 277–304. [CrossRef].
- Rugman, A.M. (2005). The Regional Multinationals. Cambridge University Press. [CrossRef].
- Rugman, A.M. and Collinson, S. (2008). International business. 5th ed. Harlow, England; New York: Prentice Hall Financial Times. [Link].
- Rugman and Brewer, T.L. (2001). Oxford Handbook of International Business, The. Oxford University Press: Oxford University Press. [Link].
- Safarian, A.E. (1993). Multinational enterprise and public policy: a study of the industrial countries. Aldershot, Hants, England; Brookfield, Vt., Usa: E. Elgar Pub. [CrossRef].
- Steers, R.M. and Luciara Nardon (2006). Managing in the Global Economy. 1st ed. Routledge. [CrossRef].