Cross-investments by multinationals: A new perspective

IF 5.7 2区 管理学 Q1 BUSINESS
Mark Casson, Nigel Wadeson
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引用次数: 0

Abstract

Research Summary

Cross-flows of foreign direct investment (FDI) occur when firms invest in each other's home countries, affecting the terms of competition in each market. They are explained by internalization theory but have never been comprehensively investigated. This article models cross-investment in a duopoly with differentiated products. The firms decide whether to enter each market and whether to serve it through trade or local production. The model combines firm-, country-, and industry-level factors. It places cross-investment in the wider context of cross-sourcing, including cross-trading and asymmetric sourcing. It reveals different forms of cross-investment rather than being limited to cross-multidomestic. Overall, cross-investment is favored by highly differentiated products, low comparative advantage, large markets, high trade costs, and low costs of FDI.

Managerial Summary

Cross-investment, where firms conduct FDI into each other's home countries, is an important phenomenon but has received little recent attention in international business literature. This article seeks, through mathematical modeling, to establish a better understanding of it in the wider context of cross-sourcing. This helps to show how the strategy of the individual firm fits with those of the other firms in an international industry and how different possible industry structures and performance levels result. It includes choices over the locations from which markets are served being a potential source of first-mover advantage. For instance, committing to producing in a country could reduce the cost of serving its market, potentially altering the equilibrium outcome in favor of the first mover.

Abstract Image

跨国公司的交叉投资:新视角
外国直接投资(FDI)的交叉流动是指企业在彼此的母国进行投资,从而影响每个市场的竞争条件。内部化理论可以解释这种现象,但从未对其进行过全面研究。本文对具有差异化产品的双头垄断中的交叉投资进行建模。企业决定是否进入每个市场,以及是通过贸易还是本地生产为市场提供服务。模型结合了企业、国家和行业层面的因素。它将交叉投资置于交叉采购(包括交叉贸易和非对称采购)的大背景下。它揭示了交叉投资的不同形式,而不仅仅局限于跨多国投资。总体而言,产品差异化程度高、比较优势低、市场规模大、贸易成本高、外国直接投资成本低,都有利于交叉投资。
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来源期刊
CiteScore
14.20
自引率
11.80%
发文量
46
期刊介绍: The Global Strategy Journal is a premier platform dedicated to publishing highly influential managerially-oriented global strategy research worldwide. Covering themes such as international and global strategy, assembling the global enterprise, and strategic management, GSJ plays a vital role in advancing our understanding of global business dynamics.
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