Economic Performance of U.S. Multinational Manufacturing Firms: The Linkages between Foreign Direct Investment and Firm Strategy

This study assesses the sequential relationships between firm strategic factors, foreign direct investment (FDI) activity, and financial performance for a sample of U.S.-based multinational manufacturers. After using hierarchical regressions and path analysis, this study finds an unambiguously positive direct effect of FDI on performance, and a complementary effect between FDI and firm strategy on performance. Specifically, this study provides insights about the direct effect of FDI on performance, as well as about the joint effect of firm size and FDI, marketing intensity and FDI, and capital intensity and FDI on performance. Finally, these findings present evidence that FDI activity is an important factor for U.S. manufacturers’ financial strength.