 Multinational operational flexibility, within-network redundancy, and downside risks and divestment rates of international investmentsSangcheol Song International Business Review, 2023, vol. 32, issue 1 Abstract: This study takes the multinational operational flexibility perspective anchored in real options theory to examine how intra-firm connectedness and switchability affect the performance and longevity of international investments. We postulate that more extensive intra-firm trade connectedness, along with multinationality, reduces downside risks and divestment rates. Through an empirical examination of a large sample of Korean multinational corporations, we find that more extensive trade ties within the same MNC network are negatively associated with downside risks. We also find that decreased downside risks decrease divestment rates. Furthermore, we observe that these impacts of intra-firm trade ties are more salient when more in-network manufacturing subsidiaries produce the same product type and operate in negatively correlated countries in terms of labor costs. These findings indicate how the flexible configurations of international investments influence their performance and longevity. Keywords: Multinationality; Downside risk; Divestment rate; Intra-firm trades (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:32:y:2023:i:1:s0969593122000786 Ordering information: This journal article can be ordered from DOI: 10.1016/j.ibusrev.2022.102050 Access Statistics for this article International Business Review is currently edited by P. Ghauri More articles in International Business Review from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.