Investing in conflict zones: a firm-level analysis

Jo Crotty, Nigel Driffield, Chris Jones

Research output: Contribution to conferenceAbstract

Abstract

The purpose of this paper is to examine, using panel data econometric techniques, the determinants of a firm’s strategy to invest in a conflict location. To the best of our knowledge this has not been done before. We use a large database of firm-level data that includes 2858 multinational firms that have a subsidiary in a developing country (during 1999-2006). Out of these firms 290 are classified as having a subsidiary in a conflict location. The choice of a conflict location is based on data from the Inter Country Risk Guide (ICRG). We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations. We have four hypotheses: (1) Firms with concentrated ownership are more likely to invest in a conflict region; (2) Firms from countries with weaker institutions are more likely to invest in conflict regions; (3) Firms and Countries with less concern over corporate social responsibility are more likely to invest in conflict countries; and (4) that there is large sector level differences in the propensity to invest in a conflict region. The results suggest that all of these hypotheses can be confirmed.
Original languageEnglish
Publication statusPublished - 2009
Event68th international Atlantic economic Conference - Boston, United States
Duration: 9 Oct 200911 Oct 2009

Conference

Conference68th international Atlantic economic Conference
Abbreviated titleIEAS
CountryUnited States
CityBoston
Period9/10/0911/10/09

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Investing
Subsidiaries
Propensity
Firm strategy
Panel data econometrics
Multinational firms
Concentrated ownership
Corporate Social Responsibility
Country risk
Multinationals
Low-income countries
Developing countries
Data base
Firm-level data

Cite this

Crotty, J., Driffield, N., & Jones, C. (2009). Investing in conflict zones: a firm-level analysis. Abstract from 68th international Atlantic economic Conference, Boston, United States.
Crotty, Jo ; Driffield, Nigel ; Jones, Chris. / Investing in conflict zones : a firm-level analysis. Abstract from 68th international Atlantic economic Conference, Boston, United States.
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note = "68th international Atlantic economic Conference, IEAS ; Conference date: 09-10-2009 Through 11-10-2009",

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Crotty, J, Driffield, N & Jones, C 2009, 'Investing in conflict zones: a firm-level analysis', 68th international Atlantic economic Conference, Boston, United States, 9/10/09 - 11/10/09.

Investing in conflict zones : a firm-level analysis. / Crotty, Jo; Driffield, Nigel; Jones, Chris.

2009. Abstract from 68th international Atlantic economic Conference, Boston, United States.

Research output: Contribution to conferenceAbstract

TY - CONF

T1 - Investing in conflict zones

T2 - a firm-level analysis

AU - Crotty, Jo

AU - Driffield, Nigel

AU - Jones, Chris

PY - 2009

Y1 - 2009

N2 - The purpose of this paper is to examine, using panel data econometric techniques, the determinants of a firm’s strategy to invest in a conflict location. To the best of our knowledge this has not been done before. We use a large database of firm-level data that includes 2858 multinational firms that have a subsidiary in a developing country (during 1999-2006). Out of these firms 290 are classified as having a subsidiary in a conflict location. The choice of a conflict location is based on data from the Inter Country Risk Guide (ICRG). We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations. We have four hypotheses: (1) Firms with concentrated ownership are more likely to invest in a conflict region; (2) Firms from countries with weaker institutions are more likely to invest in conflict regions; (3) Firms and Countries with less concern over corporate social responsibility are more likely to invest in conflict countries; and (4) that there is large sector level differences in the propensity to invest in a conflict region. The results suggest that all of these hypotheses can be confirmed.

AB - The purpose of this paper is to examine, using panel data econometric techniques, the determinants of a firm’s strategy to invest in a conflict location. To the best of our knowledge this has not been done before. We use a large database of firm-level data that includes 2858 multinational firms that have a subsidiary in a developing country (during 1999-2006). Out of these firms 290 are classified as having a subsidiary in a conflict location. The choice of a conflict location is based on data from the Inter Country Risk Guide (ICRG). We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations. We have four hypotheses: (1) Firms with concentrated ownership are more likely to invest in a conflict region; (2) Firms from countries with weaker institutions are more likely to invest in conflict regions; (3) Firms and Countries with less concern over corporate social responsibility are more likely to invest in conflict countries; and (4) that there is large sector level differences in the propensity to invest in a conflict region. The results suggest that all of these hypotheses can be confirmed.

M3 - Abstract

ER -

Crotty J, Driffield N, Jones C. Investing in conflict zones: a firm-level analysis. 2009. Abstract from 68th international Atlantic economic Conference, Boston, United States.