Determinants of foreign direct investment: An analysis of Japanese investment in Ireland using the Kano model

Ireland has long been a prime location for foreign direct investment (FDI) by multinational corporations (MNCs). However, the literature on FDI in Ireland is dominated by foreign investment from the US and little attention is paid to other investors. With the redefinition of global economics and the increasing importance of Asian economies, there is a need to broaden Ireland's attractiveness to other global investors. Japan is the world's fourth largest economy but only 2% of foreign jobs in Ireland are in Japanese firms. This paper reports on an exploratory investigation into the locationspecific FDI factors that attract Japanese MNCs to Ireland. In the process, the study seeks to understand the salient factors for investment by Japanese firms in terms of policy, economic and business facilitation determinants so that policy makers can increase its attractiveness to Japanese MNCs. Data was collected from 11 Japanese MNCs and 2 support agencies using a structured Kano model which allows us to differentiate levels of satisfaction with, and relative importance of, 23 FDI attributes generated from the literature. Our findings reveal that Ireland's low corporate tax rate is the most important determinant for Japanese MNCs to invest in Ireland followed closely by the presence of a skilled workforce. While government's role in maintaining stability and the ability to access to large regional markets were found to be imperative, we learned that the nature of the domestic market was not important at all to Japanese investors. We also found that interconnected clusters of FDI factors are influential to Japanese investors when investing in Ireland. The research is important for many reasons. The study analyses the issues that must be addressed to attract Japanese foreign investors. The findings can inform leaders and policy makers about specific best practices that offer value to the investor. Consideration of these findings can help create a business environment that is more conducive to FDI activity.