Abstract

Purpose: This study examines whether distribution science is associated with foreign direct investment (FDI) inflows into Vietnam under global supply chain fragmentation, and whether institutional quality and infrastructure shape this relationship. Research design, data, and methodology: Using annual data for 2010–2025 (N=16), we estimate baseline and interaction OLS time-series models with robust standard errors. Friend-shoring intensity is measured as the share of realized FDI from geopolitically aligned partner economies, fragmentation is proxied by a disruption index, and GDP, trade openness, and the exchange rate are included as controls; Durbin–Watson statistics are used to check autocorrelation. Results: Friend-shoring is positively and significantly related to total FDI inflows, while fragmentation is negatively related. Institutional quality and infrastructure display positive effects. The interaction between friend-shoring and fragmentation is negative and statistically significant, indicating that stronger fragmentation dampens the investment gains from friend-shoring. The models show strong fit (Adj. R² around 0.81–0.84), and lagged specifications yield consistent signs. Conclusions: Vietnam can attract more stable FDI by combining selective partner-based facilitation with reforms that strengthen governance, regulatory predictability, and transport–logistics infrastructure, thereby reducing vulnerability to fragmentation shocks. The evidence clarifies how alignment and domestic capacity jointly shape FDI in an emerging manufacturing hub.