Performance of foreign direct investment from Singapore

Abstract

This study was conducted with two broad aims: to assess the performance levels attained by foreign direct investment (FDI) undertaken by Singapore firms and to identify the key determinants of the performance levels attained. We employed a broad set of perceptual measures, as reported by the MNC parent managers, to assess the performance of foreign subsidiaries. The measures included: stability, profitability, overall success, market share and sales growth. We hypothesized that the performance of (FDI) will be influenced by the following factors: mode of entry, cultural distance, relative size of the subsidiary and host government attitudes. Based on an analysis of 128 responses to a survey, we find that Singapore firms’ foreign subsidiaries achieve moderate levels of performance. The data analysis also revealed that FDI performance was positive under the following conditions: the host government attitudes were positive and the subsidiaries were of large size relative to the parent.