Foreign Direct Investment in Global Cities and Co-Ethnic Clusters: Characteristics, Profitability, and Survival

Abstract

While global cities such as New York, Los Angeles, and Toronto provide multinational enterprises (MNEs) with a range of economic, infrastructure, and ecosystem advantages, they also present significant cost and competitive challenges. I compare the characteristics, profitability, and survival of foreign subsidiaries between global cities, their metro areas, and other locations. I also consider the effect of co-ethnic and co-industry clusters. My sample comprises 2,863 subsidiaries of 1,605 Japanese MNEs in North America over the time period 1990-2013 and I apply a multilevel longitudinal analysis model. I discuss managerial implications for location choice to improve odds of profitability and survival.