Footloose Multinationals: European Perspective

The literature does not always make a distinction between the different types of MNE activities, such as investment and relocation, which creates a theoretical gap regarding our understanding of the motivation that underlines an MNE's behaviour. In simple terms, investment can be initial or relocation (investment). In the case of initial investment, an MNE is investing for the first time; however, in the case of relocation, an MNE has to divest an existing operation and relocate it to another region, i.e. the investment exemplifies the expansion-related activity, but relocation exemplifies the move of production facilities from one country to another (Mucchielli and Saucier 1997). Hence, in the literature, investment, as a conceptual construct, might exemplify a multiplicity of meanings without providing further clarifications. MNE is constantly changing due to the changes in the internal and the external factors, but a firm cannot grow in size endlessly "there is an optimal size beyond which the firm cannot profitably expand." (Casson 2014, p.216). Therefore, regular divestments are a part of a healthy life cycle of the firm because it helps to rationalise (i.e. increase efficiency) the allocation of existing resources. Rationalisation allows MNE to develop continuously without ever reaching the 'boundary'. The rationalisation of activities we define as footloose behaviour. Footloose behaviour -is a repeated relocation of the previously divested operations over a period of time. Footloose behaviour is a process of constant bundling (i.e. investment), unbundling (i.e. divestment) and re-bundling (i.e. relocation) of activities with the aim to balance the optimal size and growth of the MNE. In this thesis, we explore a new way of investigating FDI activity through the lens of systematic 'repeated relocations', which we approach as footloose behaviour. We aim to find the drivers of footloose behaviour. In terms of methodology, we opted for a qualitative case study method. This decision was influenced by the fact that conventional quantitative methods do not offer reliable tools for the analysis of the phenomenon that is yet to be extensively explored. We want to explore the phenomenon and find the drivers of the footloose behaviour. The analysis of the data involves the coding (Nvivo) of the textual data and linking the findings to the propositions that we develop in the conceptual framework. We found that innovation and efficiency are the main drivers of footloose behaviour. The cases studies revealed an interesting interplay between the ability of the MNE to innovate and the desire to achieve the maximum level of network efficiency. We developed a typology of footloose multinationals that highlights the relative position of the company within two dimensions: innovation and efficiency. The typology, as we developed it, describes four types of footloose multinationals: IBM, Johnson Control, Procter & Gamble and Electrolux. The purpose of developing this typology was to understand better how the combination of innovation and efficiency affect footloose behaviour within different MNE