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Firm-level internationalisation and the home bias puzzle

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  • Berrill, Jenny
  • Kearney, Colm

Abstract

The extent to which internationalising MNEs create value, and the extent to which investors can reap the benefits of firm-level internationalisation remain controversial issues. Using a multi-country dataset with over 3 million observations, we classify 1143 firms listed on the exchanges of the G7 countries according to the geographical spread of their sales and subsidiaries. We show that more internationalised firms provide greater diversification benefits. By investing in home-based internationalised firms, investors can 'free ride' the costs and risks associated with internationalisation at the level of the firm and exhibit home bias while availing of international diversification benefits.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economics and Business.

Volume (Year): 62 (2010)
Issue (Month): 4 (July)
Pages: 235-256

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Handle: RePEc:eee:jebusi:v:62:y::i:4:p:235-256

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Web page: http://www.elsevier.com/locate/jeconbus

Related research

Keywords: International diversification Home bias Mean-variance spanning;

References

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Cited by:
  1. Aggarwal, Raj & Berrill, Jenny & Hutson, Elaine & Kearney, Colm, 2011. "What is a multinational corporation? Classifying the degree of firm-level multinationality," International Business Review, Elsevier, vol. 20(5), pages 557-577, October.

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