| Summary: | Foreign direct investment is a topic that currently ranks highly on the agenda of most countries, forming the basis of policy design and development on both a microeconomic and macroeconomic level. From a microeconomic perspective, business strategies are undergoing radical shifts in order to compete in an ever-competitive global climate. Businesses therefore need to diversify their operations across borders as this is essential for ensuring survival. Yet, the motivation and desire of business are not necessarily beneficial to the country, region or market that a particular business plans to enter. Some types of foreign direct investment are positive, enabling a useful and efficient flow of technology, ideas and capital and this, as highlighted in conventional literature, is the key determinant of underlining macroeconomic policy regarding foreign direct investment. Governments attempt to capture such flows. They design efficient policy tools to attract foreign investors into their regions, so that their countries may benefit from these flows in the form of job creation and receiving capital inflows from the induced investments and exports, which aid to offset balance of payment deficits. Countries may enjoy the positive spill-over of such investment that may help local business become more competitive within the international arena. Certain business interests may have strong negative effects such as abusing supplies of natural resources and the abundance of low-skilled labour that exists within developing countries, as few policies are in place to protect these often weaker economies. This may cause conflict between business and government, challenging policy makers to implement protective measures such as trade restrictions, capital market regulation and the development of organised labour policies which may seem only to encourage the flow of negative investment. The gains of such investment become ambiguous, cheering the antiglobalisation movements and discouraging the flows of foreign direct investment that may actually induce positive developments within the economies concerned. The battlefields of such fixed investment movements often establish themselves on emerging market territory, where economies are prone to both helpful and hostile attacks of foreign direct investment. The emerging economies are ever increasing in global importance on the international trade arenas. These countries, many with sound macroeconomic policy, often display rapid economic growth, developed markets and an abundant supply of cheap skilled and unskilled labour, consequently absorbing an ever-increasing share of foreign direct investment. However, the direction of foreign direct investment is difficult to determine, especially when using common constraints, such as economic, political, social and geographic factors. The focus of attention needs to be shifted to those people who are responsible for the decisions to invest. These decision-makers are not to be grouped into a singular globular mass of uniformity; neither should they be treated as a single variable in the equation attempting to explain fixed investment. They make decisions regarding foreign direct investment and are extremely complex beings, cognitively weighting certain factors that determine the decision to invest over other factors. This is an ever-changing process, and seldom will any two investors act in exactly the same way. Consequently, there is a need to explain the decision-making process of foreign direct investors in a model that is fluid, not static and that allows for the flexibility required for the survival of businesses within an ever-changing emerging market economy. This can only be explored by analysing the psychological and cognitive structure of the decisionmaking process that is not totally dependent on the macroeconomic or microeconomic forces present in policy design or company structure respectively. By understanding the process underlying decision-making, it is possible to construct a decision-making model applicable to the unique cognitive workings of the foreign investor.Clear-cut factors need to be identified which map decision-making prior to the act of investment. Therefore, the decision-making model should be constructed using an intentional bias. By using an intentional bias, the decision to act may not yet be consciously considered, but a need to act exists. If the decision-maker is presented by an opportunity, the intent may become the action. By highlighting decision-makers with a positive attitude towards an action, i.e. investment, it is possible to map the factors relevant in the decision-making process. This allows for the construction of a model mapping the intention to act, thereby creating a decision-making model. For the purpose of this thesis a survey was designed and presented to the key decisionmakers within established companies. They included senior business executives, company CEOs, managing directors, owners of businesses and others that play an executive decisionmaking role within their businesses. From these responses key factors were identified from which a behavioural model was constructed by using suitable statistical tools and constraints. This behavioural model is independent, yet influenced by factors such as economic freedom, political instability and corruption, labour market regulation and the existence of development zones within host countries. The identified factors that become relevant to the behavioural model of decision-making are attitude, level and extent of other related or competitive companies within the host country, risk type and ability to overcome such risk, the vision of the company and the social fulfilment experienced by the decision-makers. The necessity for a decision-making model regarding foreign direct investment in the emerging economies is one that cannot be underestimated. This model is designed to contribute towards the current literature on foreign direct investment, with the aim and intent of improving this body of knowledge and assisting towards streamlining policy formation.
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