The Impact of International Media Narratives on Foreign Investment: Insights From Urban Business Environments and Enterprise Performance

Amid accelerating media convergence, public opinion has become an important informal driver of regional economic outcomes, particularly through city branding. Yet quantitative evidence on how international media narratives shape foreign investment at the city‐firm level remains scarce. This paper examines how international media image affects foreign‐capital attraction, using data from 218 prefecture‐level cities in China and a Media Image Index that we construct to capture the international media image of Chinese cities. We find that a more favorable media image is associated with greater foreign‐capital attraction, an effect that operates through greater city openness and stronger international research cooperation. The effect is stronger for non‐state‐owned enterprises, for firms in lower‐technology industries, and in cities with higher market segmentation or a stronger legal environment. Foreign capital attracted in association with a favorable media image is also linked to improved firm performance. These findings highlight the dual role of media image in attracting foreign capital and enhancing firm outcomes, offering new insights into the intersection of media, foreign investment, and urban economic development.