The Nature of Compromising Foreign Investment Motives and Incentive: The Case of Korean Firms through Multidimensional Scaling Analysis

This paper tests the compromising mechanism between corporate FDI motives and host governments’ FDI policy instruments; as well as the process of reaching a compromise for the appropriate investment incentive between the incentive beneficiary and the incentive provider. To test this empirically, this paper uses multidimensional scaling analysis and multivariate regression models to analyse 195 cases of survey data. The empirical results found strong matching combinations for: efficiency-seeking motive and fiscal incentive, market-seeking motive and market preference incentive, and capability-seeking motive and financial incentive. Moreover, whilst host governments tend to be the most ill disposed towards providing market preference incentives to foreign investors, they are most favourable to adopting financial incentive policies.