Economic resilience to the FDI shock during the COVID-19 pandemic: evidence from Asia

Romdhane, Youssra Ben; Kammoun, Souhaila; Werghi, Imen

doi:10.1108/jeas-12-2021-0250

Cited by 13 publications

(12 citation statements)

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“…One of the reasons could be the scale of the FDI, that instead of happening in large business, have happened in considerably small and medium companies. As per Ben Romdhane et al (2022), Ben Romdhane Loukil et al (2021); and Dinh et al (2021), the trade policies and initiates have a direct impact on the economic growth. Also, the positive outlook of the government toward the trade policies stimulates the FDI investments in the country (Ben Romdhane et al , 2022; Dinh et al , 2021).…”

Section: Discussion Conclusion and Way Forwardmentioning

confidence: 99%

“…The trade openness, infrastructure availability and market size have played a significant role in attracting foreign investment in a country. According to Ben Romdhane et al (2022), trade openness stimulates foreign investment. The overall inflow of foreign fund to Bhutan has been relatively limited and it received less than $20m/annum during past ten years.…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, the recent pandemic of COVID-19 has obstructed all the areas of growth including education, international trade, economic growth and even FDI (Bocar et al , 2022; Khan and Magd, 2021; Magd and Khan, 2022). According to Ben Romdhane et al (2022), economic growth has a positive and significant effect on FDI inflows into Asia and is affected by trade openness and government responses during the pandemic. The county in general faces many obstacles for the business and entrepreneurship (Singh et al , 2020).…”

Section: Introductionmentioning

confidence: 99%

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FDI, disinvestment and growth: an appraisal of Bhutanese economy

Ansari

Khan

2023

JCEFTS

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Purpose The purpose of this paper is to appraise the influence and challenges of direct disinvestment or through foreign direct investment (FDI) in the Kingdom of Bhutan, particularly to identify the inflow of disinterment post pandemic and how it can be improved. Design/methodology/approach The authors investigated the influence of FDI on Bhutan’s economy by analyzing secondary published data by Asian Development Bank and government agencies of Bhutan. To find out the role FDI has played in the growth of the Bhutanese Economy. Findings The FDI is not playing a major role in the nation’s economy so far. However, its potential cannot be ignored as there is a need for foreign currency and expertise in the country. Furthermore, government policies are directly influencing the inflow of foreign exchange that affects the Bhutan’s economy. FDI has not increased considerably because of self-imposed restrictions blocking government policies. Research limitations/implications This research is based on the data collected from secondary sources, which could be considered as the main limitation of this study. The Himalayan kingdom is not much open to the outside world in terms of the publication and availability of the data. Researchers put their best effort in retrieving secondary data from authentic sources. Practical implications This research has direct implications from an institutional perspective on the government policies and procedures. This study throws light on the elements that might help in improving Bhutan’s economy, employment and productivity for an overall development of economy. Social implications Bhutan and similar countries need to understand the pros and cons of having FDIs. This study might help the government and the civil society to understand the trends FDI has triggered in the nation over last 30 years, and will help them to make appropriate policies and regulations dealing with foreign investments. Originality/value This paper underwrites the influence of disinvestment on Bhutan’s economy, which can revolutionize business, entrepreneurship and institutions. This research was conducted by analyzing secondary data released by authorized agencies, which indicated the lower inflow of foreign exchange and how to improve further.

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Section: Discussion Conclusion and Way Forwardmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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FDI, disinvestment and growth: an appraisal of Bhutanese economy

Ansari

Khan

2023

JCEFTS

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“…Conflict zones: environmental characteristics Today in light of the Covid-19 pandemic, the global business environment has experienced an unprecedent level of uncertainty (Anayi et al, 2021;Romdhane et al, 2022;Chattopadhyay et al, 2022), which has caused major fluctuations in FDI. For markets that are already experiencing conflict, the impacts of the pandemic are like to be even greater (Dhabaan et al, 2020), as conflict zones already suffer from highly volatile, uncertain, complex and risky (Anderson et al, 2010;Hacioglu et al, 2012;Driffield et al, 2013) conditions.…”

Section: Previous Literature Dynamic Capabilities Viewmentioning

confidence: 99%

Dynamic capabilities and FDI in conflict zones: the role of diversification and stock management capabilities

Abdelzaher

Ramadan

2022

RIBS

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Purpose Despite the increased level of national conflict around the world, outward foreign direct investment (FDI) targeting these areas has increased. This study aims to adopt a dynamic capability lens to examine the relationship between firm capabilities and the level of conflict in their FDI portfolio. The paper argues that conflict zones may be an attractive destination for a subset of firms, given their capability profile. Design/methodology/approach The authors draw from a sample of US Fortune 500 firms (2019) to examine their FDI destinations; specifically, they collected data on the locations of their foreign subsidiaries, which resulted into a final sample of 118 diversified US firms. The model was analyzed using ordinary least squares multiple regression to predict the extent to which their FDI portfolios have ongoing domestic and international conflict and the impact of expansion in such conflict-stricken markets on firm financial performance (ROA). Findings The authors find that firms with greater international geographical diversification capabilities, as depicted by their geographic spread, and those with greater local stock management capability, as depicted by their initial public offering maturity, are more likely to launch subsidiaries in high ongoing conflict zones. Furthermore, the authors find that while it may be unprofitable for firms to seek FDI in high-conflict zones, firms that operate in strategic industries (manufacturing, infrastructure, natural resource extraction) experienced positive performance. This can be attributed to the fact that firms operating in these sectors are more likely to directly profit in the reconstruction/rebuilding of such conflict-stricken markets. Originality/value While previous literature focused on macro-level factors, this study sought to highlight firm-level factors that determine FDI decision in conflict zones. The authors capture different dimensions/sources of firms’ dynamic capability, one resulting from foreign experience (i.e. geographic diversification) and the other from local experience (i.e. domestic stock management) to assess how each correlate with multinational corporations’ level of conflict in their FDI portfolio. Furthermore, the authors contribute to the understanding of the relationship between expansion in conflict zones and firm performance and highlight that industry does matter. Implications from this study highlight the importance of building risk management capabilities to handle not just expansion in conflict zones but also during challenging times like those brought about by pandemics.

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“…In particular, with the current volatile, uncertain, complex and ambiguous (VUCA) global business environment, the challenges for foreign expansion are immense. For example, the COVID-19 pandemic and the recent Ukraine–Russia conflict have brought about unprecedent dips in FDI trends (Boubaker et al , 2022; Chattopadhyay et al , 2022; Dräger et al , 2022; Romdhane et al , 2022) and further exacerbated the differences between parent versus local subsidiaries perspectives. Thus, in the midst of this challenging global business environment, multinational corporations (MNCs) must navigate difficult international expansion strategic choices.…”

Section: Introductionmentioning

confidence: 99%

MNCs’ orchestration capability of the 3Ds and financial performance

Abdelzaher

Torre

Rolf

2022

RIBS

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Purpose In today’s ever-increasing context of volatile, uncertain, complex and ambiguous market conditions, the shifts of countries’ protectionist policies toward inward Foreign Direct Investment (FDI), and an increased gap between headquarters’ (HQ) and subsidiaries’ perspectives on what makes business sense, it has become apparent that challenges toward foreign expansion are becoming more severe and require a multidimensional dynamic approach. The authors draw from orchestration theory, dynamic capabilities literature and previous literature on dimensions of internationalization [specifically, density, geographic distance and degree of diversity of the multinational corporation (MNC) subsidiary network] to argue that firms must enhance their orchestration capability. In doing so, this study aims to highlight the nuances of orchestrating a three-dimensional (3D) conceptualization of MNCs’ international configurations. Design/methodology/approach The authors analyzed the patterns of configurations that are adopted by MNCs. This sample was made up of the international configuration of 78 Fortune 500 MNCs consisting of 3,318 foreign subsidiaries. Furthermore, the authors examined the impact of different configurations of the 3Ds on firm performance using ordinary least squares regression analysis. Findings While the research did indicate that the sample MNCs adopted the sample configurations of the three internationalization dimensions more frequently than others, the authors found that orchestrating MNCs with an international configuration characterized by high density, low geographic distance and low internetwork scope diversity had a positive impact on firm performance. Practical implications While international expansion is often motivated by financial performance or market/resource gains, it is also impacted by the firm’s dynamic capability profile. Thus, as MNCs seek to continue to expand globally, they must assess and, if needed, develop their management team’s orchestration capability, which includes effectively determining how the addition or removal of a subsidiary will impact the density, geographic distance and diversity dynamics of the MNC’s international configuration. Finally, the management team needs to be able to devise plans to respond to the potential challenges associated with each of these dimensions. Originality/value The contribution of this study includes bringing a dynamic capabilities lens to the extant international business literature examining the multinationality and performance relationship by highlighting the importance of an MNC’s process orchestrating capability that is needed for firms to effectively manage increasingly complex subsidiary networks. It also conceptually explains and empirically supports that some configurations are likely to yield higher returns than others, which can act as a guide for firms as they are seeking to expand in more geographically distant as well as diverse sectors. Furthermore, this study highlights the need for a multidimensional simultaneous approach to the examination of internationalization to performance relationship. Finally, it highlights the tradeoffs that MNCs must address across the orchestration of the three internationalization dimensions using a dynamic capabilities theoretical lens that acknowledges the differences in perspective that exist between HQs and subsidiaries.

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Economic resilience to the FDI shock during the COVID-19 pandemic: evidence from Asia

Cited by 13 publications

References 61 publications

FDI, disinvestment and growth: an appraisal of Bhutanese economy

FDI, disinvestment and growth: an appraisal of Bhutanese economy

Dynamic capabilities and FDI in conflict zones: the role of diversification and stock management capabilities

MNCs’ orchestration capability of the 3Ds and financial performance

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