I’ve been working on a series of projects that study 1) voter preferences for foreign direct investment and 2) the bribery activity of firms.  These two topics are quite different, but one common link keeps emerging.  The country of origin (of the investment) matters.

Rene Lindsteadt and I conducted a number of survey experiments in the US and UK to examine voter preferences for FDI.

In 2009 we conducted an internet survey experiment in the United State with the following question.

In recent years, [foreign], [Japanese], [Chinese] companies have invested in the United States. Do you think these investments are good for the U.S. economy?

Yes | No | Don’t know

We found a massive drop in support for foreign investment if the company was randomized as “Chinese”.  In 2010 we conducted a follow up experiment with the same structure randomizing between foreign, German, and Saudi Arabian countries.  Saudi investments were perceived much more negatively than the other two treatments.  (The selection of these countries was based on Pew surveys on US perceptions of these four countries.  See the working paper for a description).

Ok, finding that Chinese and Saudi investment aren’t popular might seem obvious.  But why?  One of our non-experimental questions showed that natural security issues weren’t especially salient for FDI preferences, and that this effect (anti-Chinese bias) was present even when we controlled for the sector of investment and differentiated new investment from acquisitions of US firms.

These findings are related to the marketing literature on how country of origin of products not only shapes consumer preferences, but consumer evaluations of products.  (See Pandya and Venkatesan for a great working paper on how French sounding products took a hit in the great Freedom Fries war.)

I’m also working on a paper with Eddy Malesky that is a follow-up piece to this paper studying corruption in Vietnam.  Our original study focused on how high rent sectors lead foreign firms to bribe to gain entry into Vietnam.  Our new piece explores how the country of origin of the firm shapes bribery behavior.  Our preliminary evidence suggests that countries that signed the OECD convention on bribery are less likely to bribe.

Numerous studies in International Business have found similar country of origin effects.  Why? Culture? Institutions?

Shoot me off an email if you have thoughts.