The institutional environment for multinational investment

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ID: 292252
2000
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Abstract
This article posits that the effect of political hazards on the choice of market entry mode varies across multinational firms based on the extent to which they face expropriation hazards from their potential joint-venture partners in the host country (the level of contractual hazards). As political hazards increase, the multinational faces an increasing threat of opportunistic expropriation by the government. Partnering with host-country firms that possess a comparative advantage in interactions with the host-country government can safeguard against this hazard. However, as contractual hazards increase, the potential benefit to the joint-venture partner of manipulating the political system for it's own benefit at the expense of the multinational increases as well, thereby diminishing the hazard-mitigating benefit of forming a joint venture. A two-stage bivariate probit estimation technique is used to test these hypotheses on a sample of 3,389 overseas manufacturing operations by 461 firms in 112 countries.
Reference Key
openalex_W2119644075 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Witold J. Henisz
Journal The Journal of Law Economics and Organization
Year 2000
DOI
10.1093/jleo/16.2.334
URL
https://doi.org/10.1093/jleo/16.2.334
Keywords Keywords not found

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