Abstract
We show that in uncertain environments ownership and internalization advantages may be negatively rather than positively associated with FDI. This reversal from extant theory occurs because ownership advantages often serve to make FDI delayable, while internalization advantages often serve to make it less reversible. When FDI becomes either more delayable or less reversible, it is less likely to occur at a point in time. Our approach enriches the “who,” “where” and “why” explanations offered by current FDI theory to incorporate the question of “when.”
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*Pietra Rivoli is Associate Professor of Finance at Georgetown University. This paper was written while she was a Visiting Lecturer at University College Dublin. Her teaching and research interests are in international and corporate finance.
**Eugene Solario is Assistant Professor of International Business at Georgetown University and Visiting Associate Professor of International Business at Quinnipiac College. His major interests are in international trade, foreign investment, and corporate political strategy.
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Rivoli, P., Salorio, E. Foreign Direct Investment and Investment under Uncertainty. J Int Bus Stud 27, 335–357 (1996). https://doi.org/10.1057/palgrave.jibs.8490138
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DOI: https://doi.org/10.1057/palgrave.jibs.8490138