Foreign Direct Investment and Competitive Advantage

In the accepted model of foreign direct investment (FDI), investment is seen as a means for a firm to exploit its existing competitive advantage in the host nation. This book suggests that there may be a valid alternative motivation for firms to invest in another country - to gain access to the host nation’s public assets and so improve the investing firm’s worldwide competitive position.Tom Wesson looks at this asset-seeking FDI in three different ways. First, two game theoretic models are presented. This theoretical analysis is followed by a cross-sectional empirical model of inbound FDI in the United States. Finally, two case studies of asset-seeking FDI are presented. Through these varying approaches, the book shows that asset-seeking is a viable and important strategy used by multinational firms to create and enhance competitive advantage.