The sensitivity of U.S. multinational companies to institutional and macroeconomic uncertainty: a sectoral analysis

R. Desbordes

Research output: Contribution to journalArticle

21 Citations (Scopus)

Abstract

This paper confronts two alternative approaches for explaining U.S. foreign direct investment (FDI) pattern in developing countries. According to the real options (RO) approach, FDI in capital-intensive industries should be particularly deterred by political and macroeconomic uncertainty. On the other hand, the supply chain risk management (SCRM) approach puts forward that multinational enterprises in vertically integrated industries are unlikely to locate their foreign activities in risky countries. Thanks to the use of sectoral data, it is demonstrated that the SCRM approach explains much better the pattern of U.S. FDI in developing countries than the RO approach.
Original languageEnglish
Pages (from-to)732-750
Number of pages18
JournalInternational Business Review
Volume16
Issue number6
DOIs
Publication statusPublished - Dec 2007

Keywords

  • country risk
  • FDI
  • multinational enterprises
  • uncertainty
  • economic growth

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