Firms and governments operate in broad networks in which the home government and its
diplomatic service are a critical node–or a “referral point”–between firms and potential
partners in foreign locations. Thus diplomatic relations between countries matter for the
choice of foreign investment location. Using a network perspective, we argue that the extent
to which good diplomatic relations induce firms to invest in friendly host countries depends
on their political connections to home governments. Those with stronger ties to home …

Firms and governments operate in broad networks in which the home government and its
diplomatic service are a critical node–or a ''referral point''–between firms and potential
partners in foreign locations. Thus diplomatic relations between countries matter for the
choice of foreign investment location. Using a network perspective, we argue that the extent
to which good diplomatic relations induce firms to investin friendly host countries depends
on their political connections to home governments. Those with stronger ties to home …