History Matters: Colonial-Based Connectivity and Foreign Headquarter Location Choice

Abstract

In this study, we argue that European countries’ extensive relationships with former colonies represent a location factor that attracts foreign headquarter investments. The strategic role of foreign headquarters as coordinators, opportunity detectors, and global bridgeheads makes the location choice of headquarter activities sensitive to historical-based institutional connections. Drawing on a sample of 2230 foreign headquarter investments in Europe, we find that the stronger the combined effect of historical connections and current economic relationships with former colonies, the higher the probability of attracting headquarter investment projects. We refer to this combined characteristic as colonial-based connectivity. The study findings support the hypothesis that past colonial relationships and historical context influence FDI decisions and location preferences. We contribute to the literature by advancing the understanding of foreign headquarter location choices, and by demonstrating the importance of historical context in international business research. We emphasize how the former colonial influence continues to confer advantages upon some countries, including the attraction of FDI.

Decolonizing international business

“…For an explanation of what being "critical" means in the field of management, see e.g. Adler et al (2007) and Alvesson and Willmott (1992). See also Dörrenbächer and Gammelgaard (2019) for a discussion of some differences between mainstream and critical IB research.…”

“…As noted earlier, IB has effectively excluded the issue of colonialism/neo-colonialism from its research agendas and from its contributions to the business school curriculum. A few papers published in core IB journals have recently appeared that do have colonialism as an important analytical dimension (Andreu and Lavoratori, 2022; Caussat, 2021; Glaister et al , 2020; Osei et al , 2020), but these treat the issue merely as a contextual variable affecting flows of FDI and MNE location choices rather than a societal challenge to be addressed.…”