Economics at your fingertips  

The Expansion of Foreign Direct Investments: Discrete Rational Location Choices or a Cultural Learning Process?

Gabriel Benito () and Geir Gripsrud
Additional contact information
Geir Gripsrud: Norwegian School of Management

Journal of International Business Studies, 1992, vol. 23, issue 3, 476 pages

Abstract: It is recognized in the literature that experience may affect the cost and the uncertainty of operating in foreign markets, and experience and market knowledge may therefore influence the location decisions of FDIs. Economic theory does not, however, predict a general expansion pattern of FDIs across industries. On the other hand, the theory associated with the “internationalization process” approach highlights the importance of cultural distance, and predicts a movement from “close” to more “distant” markets as more experience is acquired by the firm. The internationalization process approach is rooted in a behavioral theory of the firm.In this article two hypotheses are developed from the internationalization process approach regarding the location of FDIs. The database used for testing the hypotheses includes in principle all FDIs undertaken by Norwegian manufacturing companies up to the midyear 1982. Cultural distance is measured by an index developed by Kogut and Singh [1988]. No support is found for the notion that the first FDI in general takes place in culturally closer countries than later FDIs. Furthermore, for given companies, an expansion into more distant countries is not found as the number of investments increases.© 1992 JIBS. Journal of International Business Studies (1992) 23, 461–476

Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (97) Track citations by RSS feed

Downloads: (external link) Link to full text PDF (application/pdf) 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:

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 ().

Page updated 2021-12-26
Handle: RePEc:pal:jintbs:v:23:y:1992:i:3:p:461-476