This study examines the behaviors of firms that engage in Foreign Direct Investments (FDIs). The present study is unique in adopting the classification of underperforming or outperforming, relative to aspiration level, to examine FDI behaviors. An analysis of the fixed-effects panel regression shows that the attainment discrepancy and the behaviors of their peer firms affect the listed Taiwanese firms’ FDIs into China. However, slack search is more appropriate than problemistic search in explaining firms’ FDI behaviors. Shifts of managers’ attention occur when firms face different situations. Managers may shift their attention from aspiration to survival when threats are present. The focal point of managers’ attention can be more on unabsorbed slack or potential slack depending on whether firms are pursuing aspiration or survival. Understanding how the role of aspiration level and the shifts of managers’ attention play in FDI behaviors can help outsiders such as investors and policymakers to identify firms’ strategy and modify investment strategies or policies.
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