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Value and Cost of Multinationality: International Diversification and Real Options Effects

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  • Sangcheol Song

Abstract

In this research, we examine the moderating impacts of external uncertainty and portfolio ownership on the values and costs of multinationality by comparing international diversification and real options effects. We find from Korean FDI data that uncertainty strengthens the negative value of breadth in low level of multinationality, while ownership weakens. Meanwhile, in high level of multinationality, uncertainty strengthens the positive value of multinationality while ownership weakens. While the first results support international diversification perspective, the second results support real options view.

Suggested Citation

  • Sangcheol Song, 2014. "Value and Cost of Multinationality: International Diversification and Real Options Effects," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 8(5), pages 115-125.
    • Handle: RePEc:ibf:ijbfre:v:8:y:2014:i:5:p:115-125
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    References listed on IDEAS

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    1. Lo, Fang-Yi & Bui, Quang-Tuan & Huarng, Kun-Huang, 2023. "The pace of international expansion for digital multinational enterprises," Technological Forecasting and Social Change, Elsevier, vol. 193(C).

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    More about this item

    Keywords

    Multinationality; International Area Diversification; Real Options; Uncertainty; Ownership;
    All these keywords.

    JEL classification:

    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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