International Business Review xxx (xxxx) xxx–xxx

Contents lists available at ScienceDirect

International Business Review

journal homepage: www.elsevier.com/locate/ibusrev

Exploring the relationship between institutional factors and FDI

attractiveness: A meta-analytic review
Nicholas Bailey
University of Northern Iowa, Cedar Falls, IA 50614, USA

A R T I C L E I N F O A B S T R A C T

Keywords: This meta-analysis attempts to synthesize and review decades of research on the relationship between institu-
Foreign direct investment tional factors and host country foreign direct investment (FDI) attractiveness. Using prior tests derived from 97
FDI attractiveness primary studies, we find support for prior theoretical predictions that institutional factors such as political
Institutions stability, democracy, and rule of law attract FDI, while others such as corruption, tax rates and cultural distance
Institutional environment
deter it. Further evidence suggests a need for exploration of moderating factors that may influence previous key
Location choice
Meta-analysis
findings. Specifically, environmental effects such as level of development, region of destination, and competitive
industry environment have varying influence on the strength and significance of the relationship. We also ex-
plore a number of methodological and economic moderating variables, providing additional interesting insights
into previous empirical analyses. We conclude with suggestions for future research that stress a call for further
contextualization of the relationship.

1. Introduction significant relationship between the variables (Globerman & Shapiro,

For decades scholars have been interested in exploring the main
factors that determine a country’s level of FDI attractiveness.
Traditionally, scholars focused on economic factors such as market size,
labor costs, exchange rates, infrastructure, and others as the key ex-
planatory factors in determining a host country’s ability to attract or
deter FDI (Caves, 1974; Dunning, 1980; Grosse & Trevino, 1996). In the
1990s, following the highly influential work of North (1990), FDI re-
searchers began to focus more attention on the influence of institutions
(Gastanaga, Nugent, & Pahamova, 1998; Globerman & Shapiro, 2002,
2003; Loree & Guisinger, 1995), defined as the “rules of the game in a
society or…the humanly devised constraints that shape human inter-
action” (North, 1990: 3).
The relationship between institutional factors and FDI attractiveness
is commonly described through its positive or negative effects, with
factors such as democratic institutions, political stability, and rule of
law attracting FDI (e.g. Globerman & Shapiro, 2003; Loree & Guisinger,
1995; Sethi, Guisinger, Phelan, & Berg, 2003) and factors such as cor-
ruption, tax policies and cultural distance (e.g. Globerman & Shapiro,
2003; Habib & Zurawicki, 2002; Loree & Guisinger, 1995) deterring
FDI. While these studies have contributed greatly to our understanding
of the influence of institutional factors on FDI attractiveness, they often
lack consistency in their findings. For example, some scholars find that
political stability is positive and significantly related to FDI
(Loree & Guisinger, 1995; Sethi et al., 2003), while others find no
2003; Kobrin, 1976). The relationship between tax rates and FDI is also
inconsistent: several scholars find a negative and significant relation-
ship between tax rates and FDI (e.g. Gastanaga et al., 1998;
Loree & Guisinger, 1995), while others find no significant relationship
(Chakrabarti, 2001; Swenson, 1994; Wheeler & Mody, 1992).
Some factors may also need further exploration. For example,
Cuervo-Cazurra (2006) finds that while FDI from low corruption home-
countries is deterred by high host country corruption, FDI from high
home to host country corruption may actually prefer to invest in these
environments. Similarly, the negative relationship between cultural
distance and FDI may depend on economic and other contextual factors
(Bailey & Li, 2015; Grosse & Trevino, 1996; Loree & Gusinger, 1995).
We find through a review of the FDI attractiveness literature that the
exploration of contextual moderation remains significantly under-
developed.
Given the inconsistencies in previous findings and the lack of re-
search on moderating factors, it is of critical importance to take stock of
the current state of the literature (Kirca & Yaprak, 2010) on the in-
stitutional factors and FDI attractiveness relationship. Specifically, the
contributions of this article are threefold. First, we synthesize the pre-
vious findings both qualitatively and through a meta-analytic replica-
tion study, which to our knowledge is the first of its kind. Meta-analysis
has become increasingly common methodology due to its ability to
convert statistical results across unique studies into one common me-
tric, which provides more accurate assessment of the nature of the

E-mail address: nick.bailey@uni.edu.

http://dx.doi.org/10.1016/j.ibusrev.2017.05.012
Received 22 April 2016; Received in revised form 17 May 2017; Accepted 22 May 2017
0969-5931/ © 2017 Elsevier Ltd. All rights reserved.

Please cite this article as: Bailey, N., International Business Review (2017), http://dx.doi.org/10.1016/j.ibusrev.2017.05.012
N. Bailey International Business Review xxx (xxxx) xxx–xxx

relationship than any single empirical study (Liu, Vredenburg, & Steel, frequently cited, clearly conceptualized, and empirically tested in the
2014) and a more comprehensive analysis than is possible under tra- FDI attractiveness literature.1 The first four of the six institutional
ditional qualitative reviews (Stahl, Maznevski, Voigt, & Jonsen, 2010). factors align closely with the world governance indicators from the
Second, we push past simply synthesizing the previous literature to World Bank (Kaufmann, Kraay, & Mastruzzi, 2009). The fifth, tax rates,
hypothesize that several environmental effects, namely (1) level of is a government fiscal policy often manipulated by host governments to
development, (2) region of destination, and (3) competitive environ- attract FDI. The final factor, cultural distance, is not government re-
ment, may help explain the significant variation in previous results on lated, but considered an informal institution that reflects cultural dif-
the focal relationship. Third, we further investigate the moderating ferences between home and host countries. Although it is somewhat
effects of several methodological factors through meta-analytic re- dissimilar from the other five, we include it here for several reasons: 1)
gression analysis, which leads to new and interesting insights and al- it is cited in a substantial number of articles as deterring FDI when the
lows us to better understand which factors, when included in the ana- distance between home and host country is high, 2) it is often viewed as
lysis, strengthen or weaken the relationship. an informal institution that affects the “rules of the game” within a host
We begin with a systematic review of the theoretical mechanisms, country; and (3) can carry significant cost to MNEs if not accounted
variables and methodologies used in prior studies on the influence of during location decision-making.
institutional factors on FDI attractiveness. Second, we present the For each institutional factor, we discuss the theoretical arguments,
methodology in our meta-analysis and our findings, then conclude with empirical findings and how the variables are operationalized. Our
a discussion on future directions for the relationship. analysis uncovers very few criticisms by scholars of alternative oper-
ationalizations and sources of institutional variables to those used in
2. Literature review their respective papers. We highlight a few of those sources and oper-
ationalizations below under each applicable institutional factor.
Foreign direct investment (FDI) is an “investment made to acquire a
lasting interest in or effective control over an enterprise operating
2.1. Political stability
outside of the economy of the investor” (UN, 2007). This definition
implies that a long-term relationship, one that is not undertaken
Political stability is broadly defined as the likelihood that the gov-
without significant consideration by multinational enterprises (MNEs).
ernment will be destabilized or overthrown (Kaufmann et al., 2009).
Previous scholarship focuses on what factors entice MNEs to choose to
MNEs favor political institutions that are stable, credible and honest
invest in one host country over another. Economic factors were the
(Globerman & Shapiro, 2003), because they increase legitimacy within
primary focus initially, with institutions playing a more prominent role
the host country (Trevino, Thomas, & Cullen, 2008). Political instability
in the discussion more recently.
makes a country less attractive because it creates an unpredictable
Through our review of the previous literature, the theoretical base
environment (Buthe & Milner, 2008; Loree & Guisinger, 1995;
for explaining the relationship between institutions and FDI comes
Woodward & Rolfe, 1993) that may disrupt economic processes
largely from an economics perspective, namely the costs associated
(Schneider & Frey, 1985). The unpredictability of instable political en-
with choosing one host country over another. Regarding the influence
vironments increases the costs of internalizing production (Jensen,
of institutions, government policies and other institutional factors can
2003), and ultimately negatively affects profitability.
increase or decrease costs, and ultimately influence profitability
While the theoretical underpinnings suggest that political stability
(Root & Ahmed, 1978). Host countries with market-based institutional
should be positively related to FDI, the results are mixed when em-
factors, which constrain opportunistic behavior (Fan, Morck,
pirically analyzing the relationship. Some certainly find political sta-
Xu, & Yeung, 2009), encourage foreign competition, and allow MNEs to
bility to be positively and significantly related to FDI
exploit ownership advantages abroad, are likely to decrease costs and
(Campos & Nugent, 2003; Loree & Guisinger, 1995; Sethi et al., 2003;
attract FDI (Grosse & Trevino, 1996; Li & Resnick, 2003). Market sup-
Woodward & Rolfe, 1993). However, others find political stability does
porting institutions are similarly beneficial because they allow effi-
not influence FDI flows (Globerman & Shapiro, 2003; Kobrin, 1976),
ciency-seeking investors to realize cost-saving benefits of internalizing
which holds across a number of contexts, such as in less developed
production (Meyer & Nguyen, 2005) and protect intellectual property
countries (Kobrin, 1976), in Latin America (Trevino et al., 2008) and
from being appropriated (Khoury & Peng, 2011). Several scholars have
within technology intensive industries (Globerman & Shapiro, 2003).
suggested that overall MNEs prefer a liberal general environment for
Since the results do not reach consensus, political stability may or may
FDI (Globerman & Shapiro, 2003; Sethi, Guisinger, Ford, & Phelan,
not influence FDI flows.
2002, 2003). Conversely, institutional factors that increase costs create
There are several sources for the political stability variable. Loree
inefficiencies in markets and allocation of resources, and are therefore
and Guisinger (1995) and Woodward and Rolfe (1993) use a composite
likely to deter FDI (Cuervo-Cazurra, 2006; Grosse & Trevino, 1996;
index variable that measures political risk from the ICRG; Campos and
Habib & Zurawicki, 2002; Robertson & Watson, 2004). Unreliable in-
Nugent (2003) and Kobrin (1976) draw data from Barro and Lee
stitutional environments can also create uncertainty, rendering a par-
(1993), an updated version of the Banks (1971) dataset, which mea-
ticular environment less predictable and hence a deterrent for FDI
sures the number of assassinations and revolutions per year; Sethi et al.
(Buthe & Milner, 2008; Globerman & Shapiro, 2003; Jensen, 2003;
(2003) a 100 point scale from the Association for Investment Man-
Woodward & Rolfe, 1993).
agement and Research where a higher score indicates greater stability;
Thus, those host governments most successful in attracting FDI will
Trevino et al. (2008) the Policy Constraints Index, which measures the
provide at a minimum a stable political environment where market-
likelihood of a major host country political or policy change;
based institutions are reliable and predictable and public institutions
Globerman and Shapiro (2003) an index of armed conflict, social un-
that allow MNEs to exploit their home-country advantages, increase
rest, ethnic tension, terrorist threats, etc. from the World Governance
efficiency and thereby reduce costs (Sethi et al., 2002, 2003). In short,
Indicators (WGI).
“good government” attracts FDI (Fan et al., 2009).
In this case, there is no consistency in variable choice across dis-
Based on our review, the following six institutional factors receive
ciplines. Where there is overlap, both Loree and Guisinger (1995) and
the most significant scholarly attention in increasing or decreasing the
Woodward and Rolfe (1993) find similar results, while in Campos and
costs associated with cross-border economic activity, and result in ei-
ther attracting or deterring FDI: (1) political stability, (2)rule of law, (3)
democratic institutions, (4) corruption, (5) tax rates, and (6) cultural 1
Similar factor lists are found in well-cited articles such as Globerman and Shapiro
distance. While there are certainly others, these factors are the most (2003) and Pajunen (2008).

2
N. Bailey
Nugent (2003) and Kobrin (1976) the results differ. It is possible that
the different time-periods analyzed may explain the disparate results.
The Campos and Nugent (2003) dataset covers five year averages from
1960 to 1990, while the Kobrin (1976) dataset only covers 1964–1967.
2.2. Rule of law
Whether citizens abide by the rule of law, the quality of the legal
system, contract enforcement and property rights also encourages FDI
into a given country. An effective, impartial and transparent legal
system that protects property rights is considered virtually a pre-re-
quisite for FDI consideration (Globerman & Shapiro, 2003; Sethi et al.,
2002, 2003). Strong legal institutions decrease transaction costs for
MNEs, because in these environments external enforcement and mon-
itoring is reliable (Gastanaga et al., 1998; Khoury & Peng, 2011). Strong
rule of law decreases uncertainty, protects MNEs, and permits foreign
competition by addressing market failures (Brewer, 1993;
Globerman & Shapiro, 2003; Li & Resnick, 2003), which should increase
efficiency and ultimately improve profitability.
Previous empirical results suggest that rule of law
(Globerman & Shapiro, 2003) and a strong legal system that protects
intellectual property rights (Khoury & Peng, 2011) positively and sig-
nificantly relate to FDI. More specifically, property rights protection is
positively associated with FDI inflows in developing countries
(Li & Resnick, 2003) and in the former communist bloc (Javorcik,
2004). A high level of contract enforcement is also significantly related
to FDI (Gastanaga et al., 1998).
The source and operationalization of rule of law variables does not
appear to have a significant effect on the relationship. Globerman and
Shapiro (2003) use an index measuring contract enforcement, property
rights, quality of the legal system, etc. from the WGI; Javorcik (2004)
the Ginarte–Park index with five categories of patent laws from the
International Intellectual Property Alliance; Gastanaga et al. (1998) an
index of contract enforcement from Business Environmental Risk In-
telligence; Khoury and Peng (2011) an index of strength of the legal
system from the Fraser Institute; finally, Li and Resnick (2003) utilize
an index of property rights protection from the ICRG.
2.3. Democratic institutions
Similar arguments for decreasing costs are made for democratic
institutions, defined as political freedom and civil liberties, which in-
cludes individual rights such as freedom of speech, press, etc. Jensen
(2003) argues that democratic institutions are more credible, stable,
less prone to conflict, and can provide more favorable policies towards
MNEs. Li and Resnick (2003) agree with Jensen (2003) only when the
degree of pluralism, broadly defined as the dispersion of power, within
a representative democracy is high as they relate to reducing risks for
foreign investors, which encourages FDI inflows.
Previous findings on the relationship between democracy and FDI
conclude that the higher the extent that civil liberties and political
freedoms are protected within a country, the higher the FDI
(Globerman & Shapiro, 2003; Harms & Ursprung, 2002; Jensen 2003;
Kolstad & Villanger, 2008). Contextually, this result holds in both
Western & Eastern Europe (Disdier & Mayer, 2004) and within certain
technology-intensive industries (Globerman & Shapiro, 2003). In sum-
mary, the findings are more consistent here that favorable democratic
institutional factors such as civil liberties and political freedoms attracts
FDI.
The source of the variables does not appear to have an effect on the
statistical significance of the findings. Harms and Ursprung (2002) use
an index of political rights from Freedom House; Globerman and
Shapiro (2003) an index measuring civil liberties, political rights, free
press, legal fairness, etc. from the World Governance Indicators (WGI);
Jensen (2003) and Li and Resnick (2003) an ordinal ranking from the
Polity III and Polity IV datasets; Kolstad and Villanger (2008) an index
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of democratic accountability from the International Country Risk Guide
(ICRG). Despite the lack of consensus on the source of the variable, the
variance of which appears to align by discipline, the results are con-
sistent.
2.4. Corruption
Corruption is defined by Kaufmann et al. (2009: 4) as “the extent to
which public power is exercised for private gain” and includes such
activities as bribery, cronyism, nepotism, patronage, graft, and em-
bezzlement. The theoretical foundation for the relationship between
corruption and FDI also focuses on the increase in costs associated with
corrupt practices. Corruption creates inefficiencies in markets and in
allocation of resources, which increases production and management
costs (Cuervo-Cazurra, 2006; Gastanaga et al., 1998;
Habib & Zurawicki, 2002; Robertson & Watson, 2004) and deters FDI.
There are a number of scholars who find a significant negative re-
lationship between levels of corruption and FDI (Globerman & Shapiro,
2003; Habib & Zurawicki, 2002; Wei, 2000a, 2000b) and in developing
countries (Gastanaga et al., 1998). Similarly, Cuervo-Cazurra (2006)
found that MNEs from low corruption home-countries are deterred by
high corruption in host countries. However, he also found that MNEs
from highly corrupt home-countries are not deterred and may even
prefer to invest in host countries that are highly corrupt (Cuervo-
Cazurra, 2006).
Wei (2000b) uses several measures of corruption, a corruption index
from the Global Competitiveness Report and World Development Re-
port based on surveys from business executives, and an aggregated
Corruption Perceptions meta-index (CPI) from Transparency Interna-
tional. Wei (2000b) argues that corruption ratings based on surveys of
managers are preferable to other forms of operationalization such as
“in-house experts” due to the more direct experience with corruption in
each individual host country. Wei (2000a) uses the alternative data
sources from in-house experts at the Economist Intelligence Unit and
the ICRG. The results for both measures of corruption are consistent.
Habib and Zurawicki (2002) also use the CPI from Transparency In-
ternational; Globerman and Shapiro (2003) and Cuervo-Cazurra (2006)
a graft and corruption index from the WGI, which measures corruption
among public and private officials, extent of bribery, etc.; and
Gastanaga et al. (1998) an index of the absence of corruption from
Mauro (1995). Therefore, we find little evidence of systematic differ-
ences across corruption measures.
2.5. Tax rates
Fiscal policies designed to increase revenue such as high tax rates
deter FDI because of the increases in associated costs for MNEs (Rolfe,
Ricks, Pointer & McCarthy, 1993). Hence, many host countries seek to
attract FDI through the use of tax incentives, which lower the MNEs tax
burden and sends a signal that a particular host country is investment
friendly (Sethi et al., 2002). Lower tax rates can also compensate MNEs
for the positive economic externalities they create for host countries
(Lim, 2005).
Regarding tax policies,—including tax rates, and tax incentives—the
results are also mixed. There is a significant amount of empirical sup-
port for the theoretical suggestion that tax rates are negative and sig-
nificantly related to FDI (Gastanaga et al., 1998; Javorcik & Spatareanu,
2005; Loree & Guisinger, 1995; Wei, 2000) and in developed economies
(e.g. Billington, 1999; Chung & Alcácer, 2002) and transition economies
(Carstensen & Toubal, 2004). Others find similarly that tax incentives,
specifically the length of tax holidays, are positively related to FDI
(Woodward & Rolfe, 1993). However, Chakrabarti (2001) finds no sig-
nificant relationship between tax rates and FDI, nor does Wheeler and
Mody (1992) when specifically observing the FDI decisions of US MNEs.
Javorcik (2004) finds mixed support in transition economies. Swenson
(1994) suggests and empirically supports the notion that when
N. Bailey
combined with tax reforms, higher taxes can actually lead to higher
FDI. Edmiston, Mudd and Valev (2003) find that overly complicated tax
systems deter FDI.
Unsurprisingly, the majority of the studies analyzing tax policies are
from the economics literature, most of which utilize marginal corporate
tax rate data from PriceWaterhouseCoopers (PWC)
(Carstensen & Toubal, 2004; Gastanaga et al., 1998;
Javorcik & Spatareanu, 2005; Javorcik, 2004; Wei, 2000). All off these
studies find support for the negative relationship between tax rates and
FDI, with the exception of Javorcik (2004). However, the relatively
volatile time-period studied for the transition economies (1989–1994)
may play a significant role in the results in her study. The remainder of
the empirical research on the relationship has diverse sources. Loree
and Guisinger (1995) use effective tax rate data from the US Internal
Revenue Service. Chung and Alcácer (2002) similarly use effective tax
rate data from the Bureau of Economic Analysis, and Swenson (1994)
uses effective tax rate data from Tax Analysts, a private research group.
Wheeler and Mody (1992) use an index from Business International,
Inc. that ranks countries by desirability, so the highest score signifies
the lowest tax rate. Edmiston et al. (2003) gathered information on tax
laws from the International Bureau of Fiscal Documentation (IBFD).
With a significant amount of variation in the results of the non-PWC
data, we have ample evidence to suggest that the variation in results
may be due in part to measurement variation across sources.
Furthermore, some research has sought to explain the variation
across studies. De Mooij and Ederveen (2003) in a meta-analytic review
of taxation and FDI concluded that the relationship is negative and
significant in aggregate, but they also found systematic differences
between studies depending on the type of data used and the type of tax
rates in use by countries. Another meta-analysis by Feld and
Heckemeyer (2009) found similar heterogeneity in previous results and
the influence of moderating effects such as type of data, specifically
implications regarding the use of aggregate FDI data versus firm-level
data. Thus, there is significant variation in results on the relationship
between tax rates and FDI.
2.6. Cultural distance
We also examined the impact of cultural distance on FDI attrac-
tiveness. MNEs seeking to invest in host countries that are culturally
distant from the MNEs home country encounter large barriers when
trying to understand local customs, cognitions, norms, and behaviors
(Shenkar, 2001). In many instances, the distance is too psychically
difficult to overcome, redirecting MNE location-decisions toward loca-
tions more similar to the home country. Cultural distance increases
information and management costs (Grosse & Trevino, 1996), deterring
FDI to host countries that have high cultural distance from home
countries such as US and Western Europe where much of the FDI ori-
ginates.
Although many cultural distance studies focus on its relationship
with firm performance and entry mode (Magnusson, Baack, Zdravkovic,
Staub, & Amine, 2008), there is significant evidence of the effect of
cultural distance on FDI as well. Scholars find that cultural distance is
negatively related to FDI, particularly in contexts such as China
(Buckley, Clegg, & Wang, 2007; Du, Lu & Tao, 2008b). However, some
find no evidence (Demekas, Horváth, Ribakova, & Wu, 2007;
Meyer & Nguyen, 2005; Voyer & Beamish, 2004) and mixed evidence on
the relationship depending on contextual factors such as whether Japan
is included in the sample (Grosse & Trevino, 1996), or the time-period,
which they provide as evidence of cultural differences diminishing in
importance in FDI decisions (Loree & Guisinger, 1995; Sethi et al.,
2003). Still others find that the negative relationship is moderated by
host country demand (Bailey & Li, 2015).
The majority of these articles use the well-known Kogut and Singh
(1988) cultural distance index, based on the cultural dimensions in-
troduced by Hofstede (1980). There is a significant literature that
4
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criticizes the operationalization of cultural distance as overly simplistic
and static (Shenkar, 2001; Sousa & Bradley, 2006). Despite these re-
servations, the Kogut and Singh index and its close derivations is the
most commonly utilized operationalization of cultural distance
(Grosse & Trevino, 1996; Loree & Guisinger, 1995; Meyer & Nguyen,
2005; Sethi et al., 2003). Others have used static cultural proximity
measures such as a ranking of distance from home to host country
(Voyer & Beamish, 2004), and using historical ties such as common
language or borders (Demekas et al., 2007). The variation of findings
across studies using similar cultural distance constructs suggests that
the time-period or other contextual differences may be influencing the
results.
2.7. Level of analysis
Our review of the previous literature on the influence of institu-
tional factors in determining FDI attractiveness suggests that while the
theoretical arguments suggest certain factors such should attract FDI
and others deter. However, significant variation exists in the empirical
data sources, measurement and analyses, which may explain the in-
consistency of the results across factors.
The above review also suggests that there are key differences in the
relationship that may provide opportunity for more detailed and more
practical understanding at lower levels of analysis. Specifically, based
on our review, we conclude that the conflicting results in several of the
oft-studied institutional factors appear to be contextually driven. As
such, based on the previous studies we have identified three main en-
vironmental moderators that may provide some explanation for the
ambiguity in cross-country level results throughout the literature: (1)
level of development, (2) region of destination, and (3) the competitive
environment. While all of the institutional factors above are not re-
presented in each moderator, significant evidence for the focal re-
lationship among several factors do exist and are discussed below.
First, comparisons of institutional factors across levels of develop-
ment remain noticeably unexplored in the FDI attractiveness literature.
However, significant differences exist between developed and devel-
oping countries, which should influence the relationship between in-
stitutional factors and FDI attractiveness. Dunning and Lundan (2008)
argue that institutional influences on FDI are highly situational and
likely to differ significantly between developed and developing host
countries. Developing countries consistently rank lower in terms of
institutional quality than developed countries and are far more diverse
in quality level (Kaufmann et al., 2009).
According to Li and Resnick (2003), significant heterogeneity exists
in developing countries democratically as regime characteristics often
change over time. In contrast, democratic institutions in developed
countries have been far more stable over time (Quinn & Woolley, 2001).
Similar arguments have been made for property rights protection, in
that because fewer developing countries have adequate property rights
protection, those that do attract more FDI (Khoury & Peng, 2011). We
argue that property rights protections are very similar across developed
countries as well, thus less of a factor in attracting FDI.
Therefore, due to the more significant heterogeneity in institutional
factors across developing countries, we suggest that it is likely that the
FDI attractiveness of developing host countries with higher institutional
quality will be much stronger than that of developed host countries.
Thus, we arrive at the following hypothesis:
Hypothesis 1. The relationship between institutional factors and FDI
will be stronger in developing countries than in developed countries.
Second, Sethi et al. (2003) argue that MNEs often evaluate potential
FDI destinations at the regional level, rather than on a host country by
county basis, due to cultural, political and economic similarities and
significant uniformity in trade and investment policies. Based on our
review, the relationship between institutional factors and FDI attrac-
tiveness in the top three regional destinations for FDI—Europe, North
N. Bailey
America, and Asia (Financial Times, 2016)—is decidedly mixed. In
Europe, the evidence varies but suggests that Western Europe and
Eastern Europe should be viewed as separate destinations for FDI
(Disdier & Mayer, 2004). There is significant evidence of political sta-
bility having a positive effect on FDI in Hungary (Wang & Swain, 1995),
but not in the whole Central and Eastern European region
(Bevan & Estrin, 2004). Components of rule of law such as property
rights protections are a significant factor in Eastern Europe (Javorcik,
2004). On the deterring side, tax rates are negative but only significant
at higher income levels in Southeastern Europe (Demekas et al., 2007).
Corruption has a negative relationship in transition economies
(Javorcik & Wei, 2009). Finally, cultural distance is not an important
factor in Western Europe in the late 1990s (Sethi et al., 2002).
In the United States and Canada, results follow the theoretical
predictions: in Canada, policy changes, including exempting bureau-
cratic review and strengthening the legal environment, increase FDI
attractiveness (Globerman & Shapiro, 1999). A number of scholars find
strong evidence that taxation has a profound effect on FDI attractive-
ness in the United States (Coughlin, Terza, & Arromdee, 1991; Slemrod,
1991; Swenson, 1994). In the Asia region, studies are dominated by
explaining Chinese FDI and appear stronger and more consistent in
their results. Corruption and tax rates are significant deterring factors
(Du et al., 2008a, 2008b; Wei, 2000b), and other studies find strong
evidence of political stability and rule of law in China increasing FDI
attractiveness (Du et al., 2008a, 2008b; Wang & Swain, 1995). Thus,
our review combined with the arguments for levels of development
would suggest that the relationship between institutional factors and
FDI will be strongest in Asia (i.e. China), followed by North America,
and then Europe. Accordingly,
Hypothesis 2. The relationship between institutional factors and FDI
will be strongest in Asia, followed by North America and then Europe.
Finally, in the competitive environment, the majority of articles
using sectoral FDI do not make sector-specific theoretical arguments,
but use the context to test FDI theory more generally. Thus, there is very
little in terms of systematic investigation that would suggest differences
in FDI attractiveness across competitive environments (Ali,
Fiess, & MacDonald, 2010). However, a few provide untested arguments
that suggest manufacturing and some services FDI will be more sensi-
tive to institutional factors than other sectors. For example, in export-
oriented manufacturing, many MNEs are highly mobile, meaning the
resources they seek abroad are generally not location specific
(Woodward & Rolfe, 1993). Thus, they can be highly sensitive to a
range of location factors. Hence, due to high investment mobility in
these competitive environments, institutional factors such as political
stability, democracy and taxation can more strongly influence invest-
ment decisions for manufacturing and services FDI than other sectors
(Ali et al., 2010; Busse, 2004; Woodward & Rolfe, 1993). Accordingly,
Hypothesis 3. The relationship between institutional factors and FDI
will be stronger in manufacturing and service sectors than in other
sectors.
In sum, although significant attention is given to the relationship
between institutional factors and FDI attractiveness, the literature lacks
empirical consensus across the six institutional factors analyzed here.
Furthermore, contextual analyses at lower levels of analysis remain
largely unexplored, but may explain some of the inconsistencies in the
previous findings. In an effort to provide additional clarity to the re-
lationship, while also examining important moderating factors, we use
meta-analytical methods to synthesize and extend previous findings in
the following section.
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3. Methods
3.1. Procedure
We utilized a number of search strategies to identify as many studies
that test the relationship as possible. First, we began by reading several
highly cited articles institutional factors and FDI attractiveness (e.g.
Globerman & Shapiro, 2003; Grosse & Trevino, 1996; Loree & Guisinger,
1995; Pajunen, 2008). This provided us with a general idea of the main
institutional factors cited as attracting or deterring FDI. Second, we
searched in 1) SSCI, and 2) Google Scholar using the following search
terms for the dependent variable: “foreign direct investment” and its
derivations (i.e. FDI, foreign investment, etc.). This search resulted in
FDI variables that provided: 1) a monetary representation of the
amount of FDI where the host country was known; 2) a dichotomous
variable signifying a host country investment occurred or did not occur;
or 3) a count of total investments into one or many host countries.
Third, for the independent variables, an explicit set of search terms
was difficult due to breadth of possible terms referencing institutional
factors. As such, we began with several generic terms: “institution”,
“policy”, “government”, and “political”. The results of that search led us
to a general list of categories that, with a couple of exceptions, followed
closely with four of the governance indicators from Kaufmann et al.
(2009): political stability, rule of law, democratic institutions, and
corruption. There are also a significant number of papers analyzing tax
policies, tax rates and tax incentives in particular, and cultural distance,
which the literature includes as an informal institutional factor that
deters FDI. As such, we researched the extant literature with a second
set of more specific search terms: “corruption”, “culture”, “cultural
distance”, “democracy”, “stability”, “tax”, and “law”. This second
search resulted in our final set of institutional factors: 1) political sta-
bility, which also included terrorist activities and sectarian violence; 2)
rule of law, also including crime, contract enforcement, court/judicial
effectiveness, and protection of property rights; 3) democratic institu-
tions, including political accountability to constituents, political
freedom, and civil liberties; 4) corruption, including bribery; 5) tax
rates; and 6) cultural distance. The sub-factors within the first four
governance institutional factors were assigned based on the description
of each indicator via Kaufmann et al. (2009). We also included general
institutional quality, comprising unspecified or aggregated institutional
variables and overall country risk. Several other variables were coded
but dropped in the final analysis due to lack of a sufficient number of
effect sizes.
This process yielded a sample of 91 published and 6 unpublished
studies from 1976 to 2011, the citations of which can be found starred
in the references. Despite our efforts to be as thorough as possible,
studies that meet our criteria may not have been included. Thus, the
number of studies included in the analysis should be considered as a
large sample, rather than the total population of research on the in-
stitutional factors–FDI relationship. We then developed a coding pro-
tocol similar to that of Lipsey and Wilson (2001) and van Essen,
Heugens, Otten, and Oosterhout (2012) to extract data on effect sizes,
sample sizes, and moderating variables. The authors were the primary
coders of effect sizes from the paper sample, with some assistance from
research assistants. All coding was reviewed and corrected as needed by
the primary author. If a study provided multiple samples, each corre-
lation coefficient was included as a separate independent relationship
with the corresponding dependent variable (Zhao, Luo, & Suh, 2004).
Also, as with any meta-analytic study, the data may suffer from pub-
lication bias due to a heavy emphasis on published articles. Through
our search we were able to include several unpublished studies in the
final analysis, but publication bias may still be a limitation in the data.
3.2. HOMA procedure
We use the Hedges and Olkin meta-analytic procedure (HOMA) to
N. Bailey International Business Review xxx (xxxx) xxx–xxx

compute the mean correlation between institutional factors and FDI Table 1
(Hedges & Olkin, 1985; Lipsey & Wilson, 2001; van Essen et al., 2012). HOMA results.
The data used in the HOMA are effect sizes, which capture the asso-
Predictor Partial correlation coefficient
ciational strength of the relationship within each study. We use partial k Mean ρ s.e. Q test
correlation coefficients (rxy.z) as effect sizes for two reasons: 1) they are
easily interpretable, and 2) are scale-free measures of linear association Attracting institutional factors to FDI 499 0.07* 0.00 5265*
Political stability to FDI 129 0.05* 0.01 490*
(Geyskens, Krishnan, Steenkamp, & Cunha, 2009; van Essen et al.,
Rule of law to FDI 112 0.07* 0.00 3236*
2012). In this case, rxy.z measures the association between institutional Democratic institutions to FDI 139 0.03* 0.01 709*
factors (X) and FDI (Y), given a set of control variables (Z). It is com- Institutional quality to FDI 119 0.16* 0.01 867*
puted from the t-statistics and degrees of freedom reported in each Deterring institutional factors to FDI 343 −0.08* 0.00 12927*
primary study in the sample (Greene, 2008).2 We also use partial cor- Corruption to FDI 111 −0.13* 0.01 1109*
Tax rate to FDI 205 −0.06* 0.01 11397*
relations due to the large number of studies from economics and poli-
Cultural distance to FDI 27 −0.11* 0.03 58*
tical science which do not report bivariate effect sizes (Combs, Ketchen,
Crook & Roth, 2011; van Essen et al., 2012). We run further contextual k = number of effect sizes; mean ρ = estimate of the partial correlation coefficient;
analyses for industry and regional specifications by limiting the statis- s.e. = standard error; Q = Cochran’s homogeneity test statistic. Mean effect sizes with (*)
tical sample to those contexts. are statistically significant (p < 0.05).
Current meta-analytic statistical conventions suggests using
random-effects HOMA for combing estimates when the number of correlation value (Hedges & Olkin, 1985: 235; van Essen et al., 2012). It
studies is large as it assumes the population effect size varies from study also implies further moderating analyses may be necessary in order to
to study (Geyskens et al., 2009; van Essen et al., 2012). To estimate the better assess the true nature of the focal relationships.
mean effect size correctly, we weight the effect sizes by the number of As shown in Table 2, the relationship between attracting institu-
observations (country-years or firm-years). The same weighting pro- tional factors and FDI is significantly larger for developing countries
cedure is used to calculate the standard error of the mean effect size. than for developed countries. Thus, Hypothesis 1 is supported. In each
of the individual types of institutional factors the relationship is
stronger for developing countries with the exception of political stabi-
3.3. MARA procedure lity, which is significantly higher for developed countries. This is pos-
sibly due to the limited number of effect sizes (15) influencing the re-
We further explore the relationship through meta-analytic regres- lationship. All t-tests for mean differences between the two populations
sion analysis (MARA), which is designed to test the relationship be- were significant at the standard p < 0.05 level, suggesting that in-
tween effect size and moderator variables in order to assess hetero- stitutional factors have a larger influence on FDI in developing coun-
geneity in the effect size distribution (Lipsey & Wilson, 2001). As shown tries than their developed counterparts. We found similar results when
in the HOMA results below, a MARA is appropriate in this study be- comparing deterring institutional factors to FDI. The coefficient means
cause of the significant level of heterogeneity in the effect sizes for the for both developed at developing countries were significantly different
institutional factors–FDI relationship. We again weight the effect sizes from each other and stronger for developing countries than for devel-
by the number of observations to account for differences in precision oped. Therefore, Hypothesis 1 is also supported on the deterring side.
across studies. MARA allows us to run significance tests for economic In Table 3, HOMA analyses for region and industry contexts indicate
and methodological control variables, as well as isolate each predictor the need for further contextualization of the institutional factors-FDI
variable’s contribution to the focal relationship. relationship. First, we ran HOMA analyses for North America, Europe
and Asia to further test for the strength of institutional factors in at-
4. Results tracting and deterring FDI. The effect sizes differ considerably in
strength and are statistically significant, thus supporting Hypothesis 2.
4.1. HOMA results For the attracting institutional factors-FDI relationship, in North
America the relationship is positive and significant at 0.12, and in
Table 1 shows the rxy.z HOMA results for the various relationships of Europe the effect size is 0.03. In Asia, the effect size is much stronger at
interest with FDI. For ease of interpretation, we separate the institu- 0.47. When isolating China, the effect is even stronger at 0.52. The level
tional factors by their sign, positive or negative, which represent the of heterogeneity (Q-test) in the effect-size distributions is significant
groups of variables that attract and deter FDI. We also provide ag- except in the United States host country context. For the deterring in-
gregate number of effect sizes, correlation coefficient, standard error stitutional factors-FDI relationship, we also find some support for
and Cochran’s homogeneity test statistic. As shown in Table 1, all six of Hypothesis 2, i.e. the relationship is not significant at the p < 0.05
the institutional factors–FDI relationships are significant, and signed as standard level for North America or Europe, but is significant for Asia at
suggested by economic theory. General institutional quality is also −0.13, suggesting that corruption and high tax rates are a significant
positive and significant. More specifically, the relationships between deterrent in Asia, but not in North America or Europe. In contrast with
political stability, rule of law, democratic institutions and FDI are po- the previous literature, we did not find strong differences in the results
sitive and significant, but the strength of the coefficients are only for Eastern Europe for either attracting or deterring institutional fac-
modest (0.05, 0.07, and 0.03, respectively). The relationships between tors.
corruption, taxation, cultural distance and FDI were negative and sig- A HOMA analysis of three competitive environments (manu-
nificant, with the strength of the coefficients higher on average (-0.13, facturing, technology-intensive, and services) finds mixed support for
−0.06, and −0.11, respectively) suggesting that deterrence may have a Hypothesis 3. The effect sizes for the three sectors differ somewhat at
stronger effect on FDI. Interestingly, the level of heterogeneity (Q-test) 0.07, 0.04, and 0.05, respectively, suggesting the strength of the re-
in the effect-size distributions of all the relationships is substantial, lationship may differ across industry contexts. The level of hetero-
which suggests ρ should be interpreted as an average, rather than a true geneity (Q-test) in the effect-size distributions of all the industry con-
texts is again significant. For the deterring institutional factors–FDI
relationships, only manufacturing is significant at −0.04. The lack of
2
According to Greene (2008), partial correlations are computed using the following
significance found for the technology-intensive and service sectors is
formula: √[t2/t2 + df)], where t is the t-statistic and df is degrees of freedom. Since this
formula produces a positive number, it is necessary to convert it to a negative number
likely due to the small number of effect sizes possible for observation
when appropriate. (k < 5). Hence, due to small effect sizes, Hypothesis 3 is only partially

6
N. Bailey International Business Review xxx (xxxx) xxx–xxx

Table 2 Table 4
HOMA results for developed and developing host countries. MARA partial correlation coefficient results.

Predictor Partial correlation coefficient Variable Model 1 (+) Model 2 (−)

k Mean ρ s.e. Q test t-test Constant 7.78 (3.27)** 9.81 (6.23)

Predictorsa
Developed: Attracting institutional factors 93 0.03* 0.00 860* * Institutional quality to FDI 0.14***
to FDI Political stability to FDI 0.06**
Developing: Attracting institutional factors 91 0.11* 0.01 362* Rule of law to FDI 0.15***
to FDI Corruption to FDI 0.00 (0.08)
Developed: Political stability to FDI 15 0.64* 0.13 89* * Tax rate to FDI 0.00 (0.08)
Developing: Political stability to FDI 32 0.07* 0.03 120* Methodological items
Developed: Rule of law to FDI 48 0.03* 0.00 545* * Published −0.07 (0.06) 0.16 (0.07)**
Developing: Rule of law to FDI 13 0.13* 0.03 26* Median year −0.00 (0.00)* −0.00 (0.00)
Developed: Democratic institutions to 7 −0.05 0.07 69* * Year control 0.02 (0.02) 0.03 (0.05)
FDI Country control −0.08 (0.04)** 0.03 (0.06)
Developing: Democratic institutions to 24 0.06* 0.02 95* Region control −0.04 (0.04) 0.23 (0.22)
FDI Endogeneity check −0.18 (0.05)***
Developed: Institutional quality to FDI 23 0.05* 0.01 61* * Management journal −0.19 (0.04)*** 0.05 (0.07)
Developing: Institutional quality to FDI 22 0.14* 0.02 45* Economics journal −0.12 (0.03)*** 0.14 (0.05)***
Developed: Deterring institutional factors to 171 −0.03* 0.01 10287* * Economic control variables
FDI GDP growth −0.04 (0.03) 0.01 (0.05)
Developing: Deterring institutional factors 26 −0.12* 0.05 657* GDP 0.15 (0.03)*** 0.05 (0.06)
to FDI GDP per capita −0.07 (0.02)*** 0.04 (0.06)
Developed: Corruption to FDI 25 −0.06* 0.01 63* * Geographic proximity −0.10 (0.05)** 0.00 (0.08)
Developing: Corruption to FDI 16 −0.11* 0.01 38* Population −0.04 (0.03)* −0.01 (0.06)
Developed: Tax rates to FDI 138 −0.02* 0.00 10115* * Education 0.04 (0.03) −0.03 (0.07)
Developing: Tax rates to FDI 10 −0.25* 0.11 563* Inflation 0.00 (0.03) −0.12 (0.09)
Trade 0.08 (0.02)*** −0.01 (0.07)
k = number of effect sizes; mean ρ = estimate of the partial correlation coefficient; Infrastructure −0.00 (0.03) 0.11 (0.06)*
s.e. = standard error; Q = Cochran’s homogeneity test statistic. Mean effect sizes and Q Wage levels 0.26 (0.03)*** 0.04 (0.06)
test with (*) are statistically significant (p < 0.05). The t-test assesses whether the mean Common language 0.09 (0.07) −0.21 (0.11)*
differences in the populations are statistically significant from each other (p < 0.05). FDI restrictions −0.00 (0.03) −0.11 (0.10)
Cultural distance is dropped in the deterring factors group due to lack of sufficient FX rate differences −0.04 (0.03) 0.07 (0.05)
number of effect sizes. R2 0.41 0.19
k 445 250
QModel (p) 367.78 (0.00) 66.33 (0.00)
Table 3 QResidual (p) 519.35 (0.00) 276.96 (0.01)
HOMA results for region and industry contexts. v 0.016099 0.031219

Predictor Partial correlation coefficient * p < 0.10.

** p < 0.05.
k Mean ρ s.e. Q test *** p < 0.01.
a
The reference group for the positive institutional factors is democratic institutions to
Attracting institutional factors to FDI FDI; the reference group for the negative institutional factors is cultural distance to FDI.
Region
North America 6 0.12* 0.03 2
Europe 82 0.03* 0.00 841* supported on the deterring institutional factors to FDI.
*Eastern Europe 41 0.04* 0.01 262*
Asia 51 0.47* 0.03 603* 4.2. MARA results
*China 47 0.52* 0.03 586*
Mixed 360 0.08* 0.00 3308*
Industry Results in Table 4 show that the data fit the model reasonably well,
Manufacturing 29 0.07* 0.02 491* as the R2 value 0.41 (Model 1) and 0.19 (Model 2). Specifically re-
Technology-intensive 27 0.04* 0.01 128* garding Model 1, within the predictor variables, when compared to the
Services 21 0.05* 0.02 46*
reference group, democratic institutions, positive institutional factors
Mixed 422 0.07* 0.00 4579*
strengthen the relationship. The methodological items shows a sig-
Deterring institutional factors to FDI
nificant negative result for median year, which suggests that the link
Region
North America 87 −0.00 0.02 265* between institutional factors and FDI has weakened over time, though
Europe 88 −0.00 0.01 8977* the result is substantively very small. When a study uses country con-
*Eastern Europe 50 0.00 0.01 225* trols the relationship weakens, suggesting that country-level differences
Asia 23 −0.13* 0.01 63* should be controlled for in future primary studies. The endogeneity
*China 19 −0.13* 0.01 63*
variable was significant, suggesting that studies that control for en-
Mixed 145 −0.09* 0.02 3208*
Industry dogeneity find a weaker effect. Finally, being published in a manage-
Manufacturing 38 −0.04* 0.02 311* ment or economics journal weakens the effect on the focal relationship.
Technology-intensive 5 −0.03 0.01 20* In Model 2, there is no effect on the focal relationship within the pre-
Services 2 −0.04 0.19 5*
dictor variables when compared to the reference group, cultural dis-
Mixed 298 −0.06* 0.01 12665*
tance. Publication bias may be a concern, as whether or not the paper
k = number of effect sizes; mean ρ = estimate of the partial correlation coefficient; was published strengthens the effects of the relationship between ne-
s.e.=standard error; Q = Cochran’s homogeneity test statistic. Mean effect sizes and Q gatively-signed institutional factors and FDI. Whether or not the re-
test with (*) are statistically significant (p < 0.05). gression analysis came from an economics journal also strengthens the
relationship. The endogeneity check had to be dropped from the ana-
lysis in Model 2 due to limited degrees of freedom.
All control variables that appear in at least 10% of all the effects
sizes are reported in order of how often they are used in a study’s

7
N. Bailey
regression analysis. These results show significant differences between
institutional factors that attract FDI and those that deter FDI. In Model
1, studies that control for GDP, trade between home and host countries
and wage levels in host country find a stronger positive relationship
between institutional factors and FDI. However, including GDP per
capita in the regression weakens the relationship. Similarly, including
geographic proximity (distance) and population variables also weakens
the positive effect in the institutional factors-FDI relationship. In Model
2, controlling for infrastructure strengthens the negative relationship,
while controlling for common language between home and host
country weakens it.
5. Discussion and future directions
In this study, we offer a synthesis of the literature on the relation-
ship between institutional factors and FDI attractiveness using meta-
analytic techniques. We find a modestly positive relationship between
institutional factors such as democratic institutions, political stability,
rule of law and FDI and, due to the robust statistical power of our meta-
analytic tests, strongly significant (see Table 1). This suggests that host
countries with stronger positively related institutions do appear to at-
tract FDI. We can also confirm that institutional factors such as cor-
ruption, tax rates and cultural distance have a negative and strongly
significant relationship with FDI. Thus, host countries with stronger
negatively related institutions do appear to deter FDI.
However, the results also show that the strength of the relationship
is modest, with all partial correlations 0.16 or less. This suggests that
studying country-level FDI attractiveness and global FDI trends in
general may provide limited value to understanding the true nature of
the relationship. With additional contextualization at lower levels of
analysis, some stronger results emerge. For example, the relationship
between political stability and FDI is much stronger at 0.64 in devel-
oped host countries than the overall sample. Similarly, tax rates have a
much stronger influence in developing host countries than in the de-
veloped. In the region and competitive environment contexts, in Asia
(and China in particular), the relationship for attracting institutional
factors to FDI is much stronger than it is in either North America or
Europe.
Furthermore, the level of heterogeneity for most effect sizes is
substantial and all are significant, suggesting that we need more con-
textualization to truly understand the relationship. From our explora-
tion of lower levels of analysis, we find that in most cases, the level of
heterogeneity decreases as more contextualization is introduced. Thus,
more practical and meaningful results are likely to be attained through
further contextualization. Distinct differences in the level of hetero-
geneity exist at lower levels of analysis that do not appear in the overall
sample. For example, there is sizeable difference in heterogeneity across
levels of development for deterring institutional factors to FDI, and
specifically tax rates, but the differences are much smaller across fac-
tors. This certainly implies a need for further moderator analysis, but it
may be more valuable in some contexts than others. Future research can
and should be done to uncover under what conditions and in what
contexts institutions attract and deter FDI.
From the MARA analysis, several important contributions emerge as
well. Including the other main positive institutional variables in the
model significantly strengthens the relationship, suggesting the im-
portance of multiple institutional variables to the institutional factors-
FDI relationship. On the attracting side, in terms of methodological
items, including country controls, a check for endogeneity, and whether
the article is published in a management or economics journal all
weaken the focal relationship. One the deterring side, whether or not
the article is published––and specifically in an economics journal––-
strengthen the relationship. Interestingly, year controls do not have an
effect on the relationship, and although median year is statistically
significant, the substantive effect is zero.
Also, we conclude from the MARA that future studies on the
8
International Business Review xxx (xxxx) xxx–xxx
attracting FDI relationship should include as control variables: trade
between home and host countries, host country wage levels, geographic
proximity (distance), and at least two of the following: GDP, GDP per
capita, and population. These controls used in previous FDI studies all
significantly moderate the relationship between attracting institutional
factors and FDI. The control variables that should be included in the
relationship between deterring institutional factors and FDI are less
understood, since only two control variables, infrastructure and
common language, significantly moderate the relationship.
Our meta-analytic review provides significant evidence of a need in
future research for more exploration of the moderating effects on in-
stitutional factors and their impact on FDI attractiveness. MNEs deal
with institutional constraints but still choose how to compete within a
given institutional environment (North, 1990). Additional studies
should explore the contextual environmental variation further across
and within regions, countries, industries and even governments, which
will enrich the FDI literature and provide more clarity and more
practical understanding. In this way, moderating analyses will help
researchers determine the contextual motivations for investment across
environments and provide more predictive accuracy to the current
broad arguments regarding institutions and FDI attractiveness.
Finally, future research should also develop the relationship be-
tween institutional factors and economic factors. According to more
recent international business scholarship (e.g. Jackson & Deeg, 2008;
Pajunen, 2008), institutions should be viewed as systemic in nature,
that is as an arrangement of reinforcing institutional configurations,
rather than individual variables. We see this approach as having po-
tential in the institutional factors-FDI attractiveness literature to further
our understanding of how institutional configurations may drive FDI
decision-making. Meta-analytic methods are an especially effective tool
in this regard, as they allow scholars to test and easily interpret re-
lationships between variables using scale-free measures of association
across multiple studies.
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