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Does political risk affect the scope of the expansion abroad? Evidence from Spanish MNEs

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  • Jiménez, Alfredo
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    Abstract

    This study examines the effect of institutions on the strategy of international diversification and on the relationships between political risk and the scope of internationalisation. Drawing on the Uppsala model but also on diversification and portfolio theory, I examine the behaviour of Spanish Multinational Enterprises (MNEs). Using negative binomial regression on a sample of 166 MNEs, I find that firms only partially follow the Uppsala model and that political capabilities play a key role in their internationalisation strategy. An interesting debate arises over the convenience of the reliance that firms show on corrupted host countries in both the short and the long term. A positive relationship between liquidity, size and unrelated diversification with the scope of internationalisation is also demonstrated, while a negative one is discovered for the age of the company with the dependent variable.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 19 (2010)
    Issue (Month): 6 (December)
    Pages: 619-633

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    Handle: RePEc:eee:iburev:v:19:y:2010:i:6:p:619-633

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    Keywords: Foreign direct investment Negative binomial regression Political risk Scope of internationalisation Spanish MNE;

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    Cited by:
    1. Jiménez, Alfredo & Delgado-García, Juan Bautista, 2012. "Proactive management of political risk and corporate performance: The case of Spanish multinational enterprises," International Business Review, Elsevier, vol. 21(6), pages 1029-1040.

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