Regulation as country-specific (dis-)advantage:smoking bans and the location of foreign direct investment in the tobacco industry

Abstract

This paper seeks to examine the relationship between smoking bans and the propensity of tobacco firms to engage in foreign direct investment (FDI). Using international business theory based on the firm-specific advantage/country-specific advantage (FSA/CSA) matrix, the authors show that, contrary to what one may expect, smoking bans at home are an important institutional intervention, reducing the propensity for firms to engage in FDI, even to countries without a ban themselves.