PURPOSE OF STUDY Foreign Direct Investment and Global Corporate Social Leadership - Ubaya Repository

research objectives, which include linear regression, analysis of variance, and logit and probit models. After addressing the first objective, the current study investigates the potential channels behind such initiative in social corporate responsibility. It thereby tests a dispute between market failure theory and transformational leadership theory, which question whether that power struggles inside conglomerates are at the root of the market inefficiencies or development policy initiative. The main contribution of the researches lies in the ability of data to empirically document such effects of power and connections on the initiative of social corporate responsibility. To run up against the partnership issues, the case study will adopt game theory approach in which the partnership coordination will be assessed to identify the payoffs to the players which could be the impact of relationship, efficiency, and profitability. Although Nash equilibrium does not always entail strategies that are preferred by the player as a group, the work of Neuman and Morgenstern reveals that there is an equilibrium solution to any zero-sum game. Moreover, cooperative game theory will be preferred for the study of triple bottom line corporate – government–community relationship in which parties negotiate and jointly agree on the term of their relationship. This research will consider contract as an integral part of strategic attention. 1.5. THEORETICAL FOUNDATION 1.5.1. DEFINITION A. Foreign Direct Investment Foreign direct investment is considered as the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. This series shows net inflows new investment inflows less disinvestment in the reporting economy from foreign investors World Bank, 2010. Direct investment represents on an asset or liability which associated with a category of cross-border investment made by a resident entity in one economy the investor aims to earn profit resulting from acquisition and sales of shares and other security OECD, 2008. This includes Special Purpose Entities, Special Purpose Vehicles, brass plate companies, holding companies, and other similar entities that have minimal or no physical presence in the economy of their legal domicile Joisce and Patterson, 2006. B. Multi National Corporation A multinational corporation or enterprise is a corporation or enterprise that manages production or services in more than one country Pitelis, 2000. The research define MNC broadly as any corporation with operations in more than one country. It needs to be pointed out that by MNCs we do not just mean Western or Japanese MNCs, but also a growing number of MNCs from emerging economies in Asia, Africa, and Latin America. According to Fortune Magazine, amongst the 500 top global companies in 2007, seventy are from emerging economies, compared to 47 in 2005 Zang, 2008. Moreover, Rugman 2004 considers that a multinational corporation as a global corporation if it has 30 of production or export to other