The
Management Department
Department
Seminar Series
DANqING WANG
University of hong kong
Tuesday,
October 16th
2018
Level 3 board room at
4:00 pm
in
Singapore
10:00 a.m
in
Cergy
Room N231
Theme: “Political
Leaders, Career Concerns and FDI Inflows”
Abstract: Host governments’ role in influencing
companies’ location choice for foreign direct investment (FDI) has been studied
much more than the impact of individual leaders in these governments. Extending
agency theory to an authoritarian government, we study how career concerns
motivate local leaders to drive FDI inflows as one of the goals delegated by
their superiors. We theorize that certain conditions may enhance the motivating
effect of career concerns: individual and regional characteristics that increase
leaders’ tendency to take risks and the alignment of leaders’ and their
superiors’ interests. We test this framework by examining Chinese city leaders
and FDI inflows into their cities from 2000–2010. In China, political leaders’
careers largely depend on local economic growth. Because newly appointed
leaders have better prospects for promotion, they should have stronger
incentives than incumbent leaders to work toward their supervisors’ interests.
Using a difference-in-differences approach, we find that newly appointed
leaders attract more FDI inflows to their cities than incumbent leaders. This
effect of political incentives is stronger for newly appointed leaders who are
younger and have political connections with their direct superiors, and also
for cities with weaker previous economic performance. We contribute to location
studies by highlighting the role of political incentives and political leaders’
characteristics in shaping intra-national differences of FDI inflows. We also
discuss theoretical implications for agency and institutional theories.
