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Interaction between firm-level and host-country characteristics and multinationals' integration choices

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  • Charlie Joyez

    () (Université Paris-Dauphine, PSL Research University,IRD, LEDa, DIAL)

Abstract

This paper extends the traditional international make or buy dilemma with a twofold contribution. First it considers joint-ventures, breaking with the common dichotomy. Second, it introduces a second source of heterogeneity among multinational rms, besides productivity: internationalization experience, which provides the rms complementary assets than does the total factor productivity (TFP). While both TFP and experience foster international integration, TFP is found to be more determinant in countries with strong contractual institutions and (only) experience matters in less certain destinations. The predictions from our reduced-form model are supported by the empirical examination of 6,321 French foreign aliates in 87 countries.

Suggested Citation

  • Charlie Joyez, 2018. "Interaction between firm-level and host-country characteristics and multinationals' integration choices," Working Papers DT/2018/03, DIAL (Développement, Institutions et Mondialisation).
  • Handle: RePEc:dia:wpaper:dt201803
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    References listed on IDEAS

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    Keywords

    FDI; joint-venture; foreign ownership; Firm heterogeneity; total factor productivity; Gradual Internationalization.;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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