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Facets of managerial evaluation of foreign direct investment in a developing country: an investigation of Australian firms investing in India

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posted on 28.03.2022, 02:18 authored by Peter K. John
This dissertation investigates managerial evaluation of FDI and IJV formation in a developing country. The assessment is likely to be influenced by a country's factor endowments, created assets and policy framework. The efficiencies of the processes relating to decision-making, IJV formation and FDI implementation in a particular country can also impact a firm's evaluation of the country. Further, all the above variables are assessed by a firm in the context of its motives and organisational characteristics. -- After an initial growth period, driven by the country's economic reforms, FDI in India seems to have stagnated at relatively low levels. In addition, the conversion of FDI proposals (approved by Indian authorities) into direct investment in the country remains low. Empirical research on FDI outflows has typically focussed on large economies. A limited industrial base and market size differentiates Australia from these countries. -- This thesis contributes to the understanding of managerial assessment of a potential FDI destination in the context of Australian firms investing in India - a recent phenomenon that has not been previously explored. This research also differentiates itself from other studies in its investigation of FDI-related processes that are virtually overlooked in earlier empirical literature. Earlier empirical studies have explored some of the dimensions affecting a firm's assessment of an FDI location in isolation. Investigating these issues on the same set of sample firms renders the findings of this research more holistic. Through exploring the impact of a firm's organisational context on its assessment of a potential FDI location, this study also addresses the inadequate attention given to a firm's 'operational and strategically-based variables' and to 'managerial' rather than 'market' processes in existing empirical literature on FDI (Dunning, 1988, p. 8; Buckley, 1996, p. 18). At a practical level, this research provides guidance to decision makers in India to improve its FDI appeal. It also identifies the key issues potential investors should consider in making FDI in the country. -- The theoretical base of this research is inter-disciplinary, incorporating explanations for FDI and IJV formation based on economics, behavioural science, organisational learning and strategic perspectives. Multiple perspectives are used in this exploratory study, primarily to extend our knowledge of FDI and IJV-related processes and decisions. The findings are also compared with the expectations of the alternative theoretical frameworks. -- The data for this research was collected from 25 Australian firms that have invested in India already or have FDI proposals approved by Indian authorities during 1993-1998. A questionnaire was completed in personal meetings with CEOs or other senior executives of the firms in the sample. This data collection was supplemented by interviews with these officers from a sub-sample of 16 firms. -- This research finds that Australian firms are primarily driven by the aggressive motive of market growth in the liberalising economy. The overall FDI attractiveness of India's location-specific factors is perceived by firms to be in the significantly attractive class, albeit close to its lower bound. It is inhibited by unfavourable perceptions of the country relating to eleven location-specific factors which are important to a firm's FDI location decision. These factors are categorised into economic/financial (six), political/legal (three) and IJV-related (two). Firms, which have already invested in India, tend to rate the overall attractiveness of these country factors lower than other firms.

History

Alternative Title

Investigation of Australian firms investing in India

Table of Contents

Overview and problem definition -- Theoretical context -- Facets of firm's evaluation of FDI and IJV formation -- Analytical framework and results -- Summary.

Notes

Bibliography: p. A291-A332

Awarding Institution

Macquarie University

Degree Type

Thesis PhD

Degree

Thesis (PhD), Macquarie University, Macquarie Graduate School of Management

Department, Centre or School

Macquarie Graduate School of Management

Year of Award

2002

Principal Supervisor

Rae Weston

Rights

Copyright disclaimer: http://www.copyright.mq.edu.au Copyright Peter K. John 2002. This thesis was digitised for the purposes of Document Delivery. Macquarie University ResearchOnline attempted to locate the author but where this has not been possible; we are making available, open access, selected parts of the thesis which may be used for the purposes of private research and study. If you have any enquiries or issues regarding this work being made available please contact Macquarie University ResearchOnline - researchonline@library.mq.edu.au. If you wish to access the complete thesis, on receipt of a Document Supply Request, placed with Macquarie University Library by another library, we will consider supplying a copy of this thesis. For more information on Document Supply, please contact ill@library.mq.edu.au

Language

English

Jurisdiction

Australia India

Extent

xli, 556, A332 p., ill

Former Identifiers

mq:7045 http://hdl.handle.net/1959.14/71423 1353181