 Capital investment and internationalizationJournal of Economics and Business, 2017, vol. 90, issue C, 48 pages Abstract: Degrees of firm internationalization vary across industries and over time, depending on a number of factors. In this paper, I hypothesize that firms mitigate the investment risk resulting from having large amounts of capital investment by expanding their business internationally. Using a large panel sample that covers non-financial firms listed in the US during the period 1990–2013, I find that capital investment negatively affects the internationalization level. The negative effect of capital investment on internationalization levels is evident for (1) large firms, (2) firms with large fixed assets, (3) firms with small and large capital investment, and (4) firms with non-positive sales growth rates. In addition, the relation between capital investment and the degree of internationalization is non-linear and varies over time. I also find that the effect is negative prior to the burst of the IT bubble in 2001, neutral during the burst of the IT bubble and the non-crisis period, and positive during and after the 2007 global financial crisis. Keywords: Capital expenditure; Corporate investment; Financial crisis; Foreign sales; Internationalization (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:jebusi:v:90:y:2017:i:c:p:31-48 DOI: 10.1016/j.jeconbus.2016.12.003 Access Statistics for this article Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter More articles in Journal of Economics and Business from Elsevier |
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