Foreign Direct Investment and Investment under Uncertainty

Pietra Rivoli and Eugene Salorio
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Pietra Rivoli: Georgetown University and University College Dublin
Eugene Salorio: Georgetown University

Journal of International Business Studies, 1996, vol. 27, issue 2, 335-357

Abstract: We show that in uncertain environments ownership and internalization advantages may be negatively rather than positively associated with FDI. This reversal from extant theory occurs because ownership advantages often serve to make FDI delayable, while internalization advantages often serve to make it less reversible. When FDI becomes either more delayable or less reversible, it is less likely to occur at a point in time. Our approach enriches the “who,” “Where“why” explanations offered by current FDI theory to incorporate the question of “when.”© 1996 JIBS. Journal of International Business Studies (1996) 27, 335–357

Date: 1996
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