Why do firms invest abroad? An analysis of the motives underlying Foreign Direct Investments

In this work it is contended the idea that, even though FDI has been at the center of the analysis for a long time, economic literature has not still adopted a unified framework for the investigation of the issue at stake. Indeed, despite some important exceptions, above all Dunning (1993), motivations have been highly disregarded from the current analysis. We put forward the idea that motives underlying what we have called a “cherry picking ” activity must be considered essential cause they shape and direct the different alternatives avail-able to the firm. Moreover, a well structured motive-based taxonomy concerning FDI decision is presented, composed by three main parts: (i) resource seeking, (ii) market seeking and (iii) non-marketable asset seeking. Finally, the effects of a set of factors on FDI decision are taken into account. We start by pointing out that empirical literature has found seemingly contradictory results on the effects of several variables on inward/outward FDI decisions. Indeed, it is shown that useful insights can be drawn from our taxonomy taking a closer look at the empirical literature dealing with factors affecting FDI decision