Doctoral Dissertations

Harjit Singh

Date of Award

12-1995

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Business Administration

Major Professor

William Q. Judge

Committee Members

Thomas J. Dean, H. Dudley Dewhirst, Michael X. Song

Abstract

Eclectic theory has been empirically tested at the industry-level to explain the foreign direct investment (FDI) activity of multinational enterprises (MNE). However, issues of implementation, industry structure, host country environmental uncertainty and FDI performance have not been investigated in a unifying framework. This dissertation extended the eclectic perspective by adopting an integrated framework to explain how the MNE's strategic planning process influenced the FDI performance given the industry's worldwide competitive structural attributes and host country environmental uncertainty.

A survey of 96 U.S. companies that have recently invested abroad in 37 countries revealed that the strategic planning process of MNEs has a major impact on the success of their FDIs. The FDI-level analysis showed that firms have to face integration and responsiveness pressures simultaneously. The need to engage in economies of scale and scope, exploit national differences in resources and overcome localization pressures also provide the organization with firm and location-specific advantages. Six planning dimensions utilized by MNEs and representing firm-specific advantages were identified. The results show the circumstances under which these planning dimensions were most effective. The study also empirically uncovered eight uncertainty dimensions present in host countries. It was proposed that the uncertainty leads to market imperfections, thereby creating location-specific advantages for theMNE.

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