The Impact of Foreign Direct Investment (FDI) on Women's Entrepreneurship


  • Kaustav Misra Saginaw Valley State University
  • Ersa Memili University of North Carolina, Greensboro
  • Dianne Welsh University of North Carolina, Greensboro
  • Hanging (Chevy) Fang Mississippi State University


Women entrepreneurs around the world have increasingly contributed to innovation, employment, and wealth creation (Brush & Cooper, 2012; Brush, de Bruin, & Welter, 2009). Studies suggest that foreign direct investment can be an important determinant of entrepreneurship in general. However, the link between foreign ventures and women entrepreneurs remains under-researched. Therefore, we suggest that the presence of foreign ventures affects women's entrepreneurship. We develop and test our model on cross-sectional data encompassing 36 countries in 2006. The results show that foreign direct investment and women's entrepreneurship have an inverted u-shaped relationship. Implications for further research and public policy are discussed.


Download data is not yet available.


Acs, Z. J. (2006). How is entrepreneurship good for economic growth? Innovations: Technology, Governance, Globalization, 1(1), 97-107.

Acs, Z. J., & Szerb, L. (2007). Entrepreneurship, economic growth and public policy. Small Business Economics, 28(2-3), 109- 122.

Agrawal, M. (1995). Review of a 40-year debate in international advertising: Practitioner and academician perspectives to the standardization/adaptation issue. International Marketing Review, 12(1), 26-48.

Ahl, H. (2006). Why research on women entrepreneurs needs new directions. Entrepreneurship Theory and Practice, 30(5), 595- 621.

Ahmad, S. Z. (2011). Evidence of the characteristics of women entrepreneurs in the kingdom of Saudi Arabia: An empirical investigation. International Journal of Gender and Entrepreneurship, 3(2), 123-143.

Amit, R., Muller, E., & Cockburn, I. (1995). Opportunity cost and entrepreneurial activities. Journal of Business Venturing, 10(2), 95- 106.

Arndt, S. W. (1997). Globalization and the open economy. The North American Journal of Economics and Finance, 8(1), 71-79.

Audretsch, D. B., & Acs, Z. J. (1994). New firm startups, technology, and macro-economic fluctuations. Small Business Economics, 6, 439- 449.

Audretsch, D. B., & Feldman, M. P. (1996). R&D spillovers and the geography of innovation and production. American Economic Review, 86(3), 630-640.

Audretsch, D. B., & Lehman, E. (2005). Does the knowledge spillover theory of entrepreneurship hold for regions? Research Policy, 34, 1191-1202.

Ayyagari, M., & Kosová, R. (2006). Does FDI facilitate domestic entrepreneurship? Evidence from the Czech Republic. Working paper. CERGE-EI Research Seminar held on.

Bartlett, C. A., & Ghoshal, S. (1989). Managing Across Borders: The Transnational Solution. Boston, MA: Harvard Business School Press.

Blomstrom, M., Kokko, A., & Zejan, M. (1995). Host country competition and technology transfer by multinationals. NBER working paper no. 4131.

Borensztein, E., De Gregirio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45, 115-135.

Braconier, H., & Ekholm, K. (2000). Swedish multinationals and competition from high and low- wage locations. Review of International Economics, 8: 448- 461.

Branstetter, L. G. (2000). Is foreign direct investment a channel of knowledge spillovers? Evidence from Japan's FDI in the United States. NBER Working Paper No. 8015.

Bransetter, L. G. (2001). Are knowledge spillovers international or intranational in scope? Journal of International Economics, 53(1), 53-79.

Brush, C., Carter, N., Greene, P., Gatewood, E., & Hart, M. (2006). The use of bootstrapping by women entrepreneurs in positioning for growth. Venture Capital Journal, 8:2, 1-19.

Brush, C. G., and Cooper, S. Y. (2012). Female entrepreneurship and economic development: an international perspective. Entrepreneurship and Regional Development: An International Journal, 24(1-2), 1-6.

Brush, C. G., de Bruin, A., and Welter, F. (2009). A gender-aware framework for women's entrepreneurship. International Journal of Gender and Entrepreneurship, 1(1), 8-24.

Burda, M. C., & Dluhosch, B. (2002). Cost competition, fragmentation, and globalization. Review of International Economics, 10(3), 424-441.

Buttner, E. H., & Rosen, B. (1989). Funding new business ventures: are decision makers biased against women entrepreneurs? Journal of Business Venturing, 4(4), 249-261.

Cheung, K., & Lin, P. (2004). Spillover effects of FDI on innovation in China: Evidence from the provincial data. China Economic Review, 15, 25-44.

Chung, W., Mitchell, W., & Yeung, B. (1996). Foreign direct investment and host country productivity: the case of the American automotive components industry. Working paper, University of Michigan, School of Business Administration.

Coe, D., & Helpman, E. (1995). International R&D spillovers, European Economic Review 39(5), 859-887.

Dragusin, M. (2007). National and regional women entrepreneurs' networks. Romanian Journal of Regional Science, 1(1), 81-90.

Ethier, W. (1986). The multinational firm. Quarterly Journal of Economics, 101(4), 805-833.

Fang, H., Memili, E., & Chrisman, J. J. (2012). The structural effects of foreign ventures on domestic entrepreneurship: A cross-country panel data analysis. Paper presented at Academy of Management 2012 meeting, Boston, MA.

Fosfuri, A., Motta, M., & Rønde, T. (2001). Foreign direct investment and spillovers through workers' mobility. Journal of International Economics, 53: 205-222.

Hamilton, R. (1989). Unemployment and business formation rates: reconciling time series and cross section evidence, Environment and Planning, 21, 249-255.

Hu, A., & Jefferson, G. (2001). FDI, technological innovation, and spillover: evidence from large and medium size Chinese enterprises. Waltham, MA: Brandeis University.

Hummels, D. (2007). Transactional costs and international trade in the era of globalization. Journal of Economic Perspectives, 21(3), 131-154.

Javorcik, B. S. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. The American Economic Review, 94, 605-627.

Johnson, P. (1986). New firms: an economic perspective. London, England: Allen and Unwin.

Keller, W. (1998). Are international R&D spillovers trade-related? Analyzing spillovers among randomly matched trade partners. European Economic Review 42, 1469-81.

Keller, W. (2002). Geographic localization of international technology diffusion. American Economic Review, 92(1), 120-142.

Keller, W. (2004). International technology diffusion. Journal of Economic Literature, 42(3), 752-782.

Kogut, B. & Zander, U. (1993). Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of International Business Studies, 24(4), 625-645.

Lipsey, R. E. (1995). Outward direct investment and the U.S. Economy. In M. Feldstein, J. Hines Jr., and R. G. Hubbard (Eds.), The effects of taxation on multinational corporations (pp. 7-33). Chicago, Illinois: University of Chicago Press.

Liu, X., Wright, M., Filatotchev, I., Dai, O., & Lu, J. (2010). Human mobility and international knowledge spillovers: Evidence from high- tech mall and medium enterprises in China. Strategic Entrepreneurship Journal, 4, 340- 355.

Morris, M. H., Miyasaki, N. N., Watters, C. E., & Coombes, S. M. (2006). The dilemma of growth: understanding venture size choices of women entrepreneurs. Journal of Small Business Management, 44(2), 221- 244.

Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change. Cambridge, MA: Belknap Press of Harvard University Press.

Nohria, N. & Ghoshal, S. (1997). The differentiated network: organizing multinational corporations for value creation. San Francisco, CA: Jossey-Bass Publishers.

Polanyi, M. (1967). The tacit dimension. London, England: Routledge & K. Paul.

Reynolds, P., Miller, B., & Maki, W. R. (1995). Explaining regional variation in business births and deaths: U.S. 1976-1988. Small Business Economics, 7(5), 389- 707.

Reynolds, P., Storey, D. J., & Westhead, P. (1994). Cross-National comparisons of the variation in new firm formation rates. Regional Studies, 28(4), 443-456.

Roomi, M., & Parrott, G. (2008). Barriers to development and progression of women entrepreneurs in Pakistan. The Journal of Entrepreneurship 17(1), 59-72.

Salmenniemi, S., Karhunen, P., & Kosonen, R. (2011). Between business and byt: Experiences of women entrepreneurs in contemporary Russia. Europe-Asia Studies, 63(1), 77-98.

Schumpeter, J. A. (1934). The theory of economic development: an inquiry into profits, capital credit, interest, and the business cycle. Cambridge, MA: Harvard University Press.

Shane, S. (2003). A general theory of entrepreneurship: the individual- opportunity nexus. Cheltenham, UK: Edward Elgar Publishing.

Shane, S. & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217- 226.

Si, S., & Bruton, G. (1999). Knowledge transfer in international joint ventures in transitional economies: the China experience. Academy of Management Executive, 13(1), 83- 90.

Si, S. & Bruton, G. (2003). Knowledge transfer in international joint ventures. In G. Redding, & B. W. Stening (Eds.), Cross-cultural management. Northhampton, MA: Edward Elgar Publishing.

Si, S. & Bruton, G. (2005). Knowledge learning, cost economizing, and competitive positioning: IJV motivation in emerging economies. Journal of Business Research, 58: 1465-1473.

Steger, M., (2002). Globalism: the new market ideology. Lanham, MD: Rowman and Littlefield Publishers.

Sternberg, R., & Rocha, H. O. (2007). Why entrepreneurship is a regional event: theoretical arguments, empirical evidence, and policy consequences. In M. Rice, & T. Habbershon (Eds.), Entrepreneurship: The engine of growth (pp. 215-238). Westport, CT: Praeger Publishers.

Storey, D. J. (1991). The birth of new firms-does unemployment matter? A review of the evidence. Small business economics, 3(3), 167-178.

Teece, D. J. (1986). Transactions cost economics and the multinational enterprise: An assessment. Journal of Economic Behavior and Organization, 7(1), 21-45.

Venkataraman, S. (1997). The distinctive domain of entrepreneurship research: An editor's perspective. In J. Katz & R. Brockhaus (Eds.), Advances in entrepreneurship, firm emergence and growth (pp. 119- 138). Greenwich, CT: JAI Press.

Weiler, S., & Bernasek, A. (2001). Dodging the glass ceiling? Networks and the new wave of women entrepreneurs. The Social Science Journal, 38(1), 85-103.

Welsh, D. H. B., & Dragusin, M. (2010). Sustainable strategic management in an emerging market economy: The case of Romanian women entrepreneurs. International Journal of Sustainable Strategic Management, 1(4), 344-359.

Williamson, O. E. (1985). The economic institutions of capitalism: firms, markets, relational contracting, free press. New York, NY: Collier Macmillan.




How to Cite

Misra, K., Memili, E., Welsh, D., & Fang, H. (Chevy). (2014). The Impact of Foreign Direct Investment (FDI) on Women’s Entrepreneurship. Journal of Small Business Strategy, 24(1), 45–60. Retrieved from