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

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  • Jiménez, Alfredo

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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  • Jiménez, Alfredo, 2010. "Does political risk affect the scope of the expansion abroad? Evidence from Spanish MNEs," International Business Review, Elsevier, vol. 19(6), pages 619-633, December.
  • Handle: RePEc:eee:iburev:v:19:y:2010:i:6:p:619-633
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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, pages 1029-1040.
    2. Maktoba Omar & Collins Osei, 2015. "An investigative analysis of the factors influencing degree of involvement in a foreign market," Transnational Marketing Journal, Transnational Press London, UK, vol. 3(1), pages 45-60, May.
    3. Alfredo Jiménez & David Fuente, 2016. "Learning from Others: the Impact of Vicarious Experience on the Psychic Distance and FDI Relationship," Management International Review, Springer, vol. 56(5), pages 633-664, October.

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