The Geography of European Multinationals - An analysis of the location determinants of investment projects in EU-28 countries

Abstract

This research focuses on the investigation of the location determinants of multinational corporations’ investments in EU-28 countries. Investment projects are addressed by making a distinction between greenfield investments and M&A projects. Besides traditional factors (such as market characteristics) the effect of innovation capabilities and the institutional environment are incorporated in the analysis. The use of an MLM makes it possible to empirically assess the effect of national and regional characteristics on the location decision of MNCs. The results suggest that for investment projects of both entry modes the traditional factors to a large extent determine the location of MNCs’ investments. Dependent on the entry mode and the business function of the investment, regional innovation capabilities and the institutional environment partly seem to affect the location decision of multinationals.