Migration and outward FDI: a double direction approach

Abstract

Purpose The purpose of this study is to identify, based on social network theory, the relationship between the direction of international migration (immigration/emigration) and the international movement of enterprises and their location. Design/methodology/approach A traditional gravity model and the Tobit estimation method are applied to three groups of countries from three different regions: Latin America, North America and the European Union. The study considers a period from 2001 to 2012. Findings The main results suggest that the international migration that goes from the European Union and North America to Latin America is related with the firms’ internationalization and their respective location. Practical implications Given that migration can be an important and reliable source of information, trust and knowledge, managers should see it as a “bridge” between the home and host countries, which, in turn, can increase their competitive advantage. Social implications Governments can learn how migration and outward foreign direct investment interact. In addition, they could develop political frameworks to accurately and effectively manage international migration (immigration and emigration) and FDI in the best interests of the stakeholders. Originality/value This study extends the social network theory by suggesting that networks are not only related with firms’ expansion abroad but as well with their location. This statement could be generalizable as long as emigration/networks (ethnic ties) are considered the links between the home and the host country.