Comparative Analysis of the Foreign Investment Evaluation Practices by U.S.-Based Manufacturing Multinational Companies

Marie E Wicks Kelly and George C Philippatos
Additional contact information
Marie E Wicks Kelly: McKinsey and Company
George C Philippatos: The University of Tennessee

Journal of International Business Studies, 1982, vol. 13, issue 3, 19-42

Abstract: A large sample of U.S.-based manufacturing multinational companies were surveyed regarding their investment valuation practices. It was found that: (a) Foreign Direct Manufacturing Investment (FDMI) is motivated primarily by profit rather than the recently proposed behavioral considerations; (b) the majority of companies practice project-by-project analysis of the simple accept/reject type, rather than the comparative project analysis advocated by financial analysts; (c) most of the companies utilized criteria for single investments, cash-flows, and cost of capital that were in general agreement with the analytical literature; (d) companies were concerned more with business risk than currency and political risks—moreover, all three types of risk were evaluated subjectively and accounted through adjustments in the required rates of return rather than the cash flows of the FDMI, as specified in financial research; (e) analysis of demographic and behavioral variables for possible relationships to FDMI evaluation practices yielded interesting but variable specific results. The questionnaires were mailed in May 1979 and the personal interviews were conducted during December 1979 and the first six months of 1980.© 1982 JIBS. Journal of International Business Studies (1982) 13, 19–42

Date: 1982
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v13/n3/pdf/8490556a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v13/n3/full/8490556a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:13:y:1982:i:3:p:19-42

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().