Dr Caroline Witte (CBS) will be presenting her co-authored work on Political First-mover Advantage: Step in Post-conflict Environments
Abstract
Multinational enterprises (MNEs) contemplating foreign direct investment in a post-conflict economy are facing a dilemma: investing now to preempt competitors or waiting for economic and institutional uncertainty to resolve. We propose that foreign investors, whose home country provides financial development aid to a specific post-conflict country, face less uncertainty and enter faster into the aid-recipient country because they acquire a first mover political advantage. We also argue that donor country firms are more likely to exploit this first mover political advantage when their home country aid is aimed to socio-economic development because they can foresee the conditions that will enable them to sustain their operations in the country. However, firms in natural resource sectors are primarily interested in pre-empting competitors by obtaining preferential leases from the newly established governments and possibly influencing the regulation of natural resources exploitation in the country. Consequently, driven by these rent-seeking goals, they are more sensitive to exploit their first mover political advantage that derived from bilateral aid aimed to budget and financial support. On a sample 1,007 location decisions of 14 post-conflict countries, we find evidence for our hypotheses.
The seminar will be in the form of a Lunch Seminar: food will be available in the seminar room.