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Title: Investor Response to Environmental Risk in Foreign Direct Investment
Authors: Goerzen, A.
Sapp, S.
Delios, A. 
Keywords: Country risk
Firm experience
Foreign direct investment
Joint ventures
Multinational corporation
Issue Date: 2010
Citation: Goerzen, A., Sapp, S., Delios, A. (2010). Investor Response to Environmental Risk in Foreign Direct Investment. Management International Review 50 (6) : 683-708. ScholarBank@NUS Repository.
Abstract: •The theory of internalization suggests that proprietary assets-usually in the form of advertising and/or marketing capabilities-are the key to understanding a firm's ability to create value in foreign markets. We show that the capacity of a multinational corporation (MNC) to create value in a foreign direct investment (FDI) can also result from the use of an alternative proprietary asset; that is, the skills and management expertise that are acquired through the accumulation of various forms of foreign experience. •The value creation comes from the extension of an MNC's experience-based capabilities to the host country to mitigate country-level risks. This experience can moderate the negative influence of environmental risk to create value for a firm and its investors. •In our sample of 305 FDIs, we find that Japanese MNCs that had direct or indirect experience in a host country showed greater abnormal returns in a FDI, particularly where environmental risk was high. © 2010 Gabler Verlag.
Source Title: Management International Review
ISSN: 09388249
DOI: 10.1007/s11575-010-0058-8
Appears in Collections:Staff Publications

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