This paper investigates the impact of Foreign Direct Investment (FDI) on entrepre-neurial activity at the individual-owner level in U.S. states between 1996 and 2008. Our results indicate that FDI has no effect on entrepreneurship in pro-business states identified by the existence of Right-to-Work (RTW) laws. In non-RTW states, however, we find that an increase in FDI decreases the average monthly rate of business creation and destruction. Specifically, a 10% increase in FDI decreases the average monthly rate of business creation and destruction by roughly 4 and 2.5% (relative to the sample mean), respectively.
- Right-to-Work laws
ASJC Scopus subject areas
- Economics and Econometrics
- Organizational Behavior and Human Resource Management