Int. J. Logistics Economics and Globalisation, Vol. 5, No. 1, 2013 59 Copyright © 2013 Inderscience Enterprises Ltd. Supply chain capability of countries and its effect on foreign direct investment: a fuzzy-set analysis Arshad Alam* College of Business, Prairie View A&M University, Prairie View, TX 77446, USA Fax: 936-261-9220 E-mail: aralam@pvamu.edu *Corresponding author Prabir K. Bagchi Decision Sciences School of Business, The George Washington University, Funger Hall 415, 2201 G St. NW, Washington, DC 20052, USA Fax: 202-994-2736 E-mail: bagchi@gwu.edu Abstract: International plant location decisions have acquired relevance in a globalised economy and evidence suggests that the overall production and logistics environment of a country would have a bearing on foreign direct investment (FDI). This study attempts to analyse the impact of the production and logistics environment on incoming FDI. We introduce a new conceptual framework of supply chain capability (SCC) of countries and using the ‘fuzzy-set analysis’ methodology attempt to determine whether SCC is a necessary or sufficient cause for FDI flows. This study validates the basic proposition that supply chain capability of a country is a determinant of FDI. Further, the study suggests that the FDI attractiveness of a country is better explained by a combination of factors as reflected by the composite variable, SCC, than by individual constituent variables. This study offers insights to firm managers to evaluate various competing country environments, thus enabling them to make better strategic decisions about foreign investment. Keywords: supply chain capability; SCC; foreign direct investment; FDI; fuzzy-set analysis. Reference to this paper should be made as follows: Alam, A. and Bagchi, P.K. (2013) ‘Supply chain capability of countries and its effect on foreign direct investment: a fuzzy-set analysis’, Int. J. Logistics Economics and Globalisation, Vol. 5, No. 1, pp.59–80. Biographical notes: Arshad Alam has worked for many years in leading organisations in India. He has an MBA from India and received his Masters in Information System Technology and PhD in Logistics and Supply Chain from The George Washington University, USA. From 2009 to 2011, he was a Visiting Professor in the Department of Decision Sciences, School of Business at The George Washington University. Since 2011, he has served as an Assistant Professor of Management at Prairie View A&M University, Texas,