Skip to Main Content
 

Global Search Box

 
 
 
 

Files

File List


osu1218472668.pdf (584.82 KB)

ETD Abstract Container

Abstract Header

The Value Of Switching And Growth Options In Foreign Direct Investment

Song, Sangcheol
http://rave.ohiolink.edu/etdc/view?acc_num=osu1218472668

Abstract Details

2008, Doctor of Philosophy, Ohio State University, Business Administration.
In this dissertation, we show that the geographic and ownership configurations of foreign direct investment have different theoretical implications for growth and switching options under different types of host country uncertainty. The literature has not taken this into account, which may explain the mixed and inconclusive results of prior studies on the real options value of international investments. Using a panel data of Korean foreign direct investment during the period 1991-2004, a period encompassing varying conditions of uncertainty in host countries, we find that firms with switching options (gained through highly dispersed operations and higher level of ownership across countries) were associated with higher value than those without such options in periods of higher uncertainty of exchange rates within international network. We also find that firms with growth options (gained through concentrated presence of subsidiaries and lower level of ownership within international network) were associated with higher value than firms without such options in conditions of host economic uncertainty. Additionally, we found the evidence to be consistent with the argument that cultural distance imposed significant additional costs that reduced the value of breadth to the firm. In this case as well, higher ownership helped to mitigate these adverse effects of cultural distance. Finally, we examined the firm's decision to add to its portfolio of investments in order to assess whether or not the firm made ongoing decisions on the basis of its flexibility needs. We found evidence that firms facing exchange rate uncertainty enhanced the breadth of their FDI portfolio, consistent with the desire to gain switching options. On the other hand, firms facing host market uncertainty tended to enhance the depth of their FDI portfolio, consistent with the desire to gain growth options.
Mona Makhija (Committee Chair)
Jay Barney (Committee Member)
Benjamin Campbell (Committee Member)
127 p.
Management
Options; FDI

Recommended Citations

Citations

  • Song, S. (2008). The Value Of Switching And Growth Options In Foreign Direct Investment [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1218472668

    APA Style (7th edition)

  • Song, Sangcheol. The Value Of Switching And Growth Options In Foreign Direct Investment. 2008. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1218472668.

    MLA Style (8th edition)

  • Song, Sangcheol. "The Value Of Switching And Growth Options In Foreign Direct Investment." Doctoral dissertation, Ohio State University, 2008. http://rave.ohiolink.edu/etdc/view?acc_num=osu1218472668

    Chicago Manual of Style (17th edition)

osu1218472668
1,746
© 2008, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.