Direct foreign investment (DFI) may benefit investors through superior cash flows or lower risk relative to purely domestic firms. This paper considers three groups of U.S. firms: those without significant international operations, those with international operations in developed countries, and those with international operations in developing countries. After performing risk-return performance analysis on the three groups, the findings show developing country DFI results in inferior performance, but that there are no statistically significant differences in market performance among the three.The positive benefits of international portfolio diversification are well documented by Grubel [1968], Levy and Sarnat [1970], Agmon [1972], Solnik [1974], and others. The case of Direct Foreign Investment (DFI) diversification is less clear. In the literature, it is argued that the benefits of DFI result from imperfections in, or segmentation of, either the markets for factors, products and technology (the goods market) or the markets for money, capital and foreign exchange (the money market). Adler and Dumas [1983], in their review of the international portfolio and corporate finance literature, point out that the majority of explanations for DFI concentrate on the former. Such market imperfections and segmentations may result in advantages of cost saving, ease of market entry, tax arbitrage, or other specific competitive advantages. Any of these will result in enhanced cash flows. Theory cannot predict a priori whether these advantages will be in developed or developing countries. Without consideration of portfolio effects, *J. Markham Collins is Associate Professor of Finance at the University of Thlsa, and recently served as Visiting Professor at the University of Hong Kong. His international research includes publications on the determinants of international capital structure, international cash management practices, and the effects on affiliate value resulting from real exchange rate changes. DFI will flow toward the countries with the higher risk-adjusted marginal rates of return. U.S. DFI is divided approximately 75/25 between developed and developing countries. On average, returns to DFI in developing countries have been higher than in developed countries over the past few years, but this was reversed in 1986 and 1987 (see Table 1). 1 CONDITIONS REQUIRED FOR POSITIVE DIVERSIFICATION BENEFITS FROM DFIFor DFI to have positive diversification benefits for shareholders, three conditions are required. (See Agmon and Lessard [1977], also Michel and Shaked [1986]). First, there must be less than perfect correlation between asset values in the different countries. Second, there must be barriers to, or costs of, portfolio investment such that the cost of DFI is less than equivalent portfolio investment. Third, the market must recognize or value this diversification. In the international context, one measure of correlation of asset values is the correlation of equity indices between countries. As van Agtmael andErrunza [1982...

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Sales professionals need to identify new sales prospects, and sales executives need to deploy the sales force against the sales accounts with the best potential for future revenue. We describe two analytics-based solutions developed within IBM to address these related issues. The Web-based tool OnTARGET provides a set of analytical models to identify new sales opportunities at existing client accounts and noncustomer companies. The models estimate the probability of purchase at the product-brand level. They use training examples drawn from historical transactions and extract explanatory features from transactional data joined with company firmographic data (e.g., revenue and number of employees). The second initiative, the Market Alignment Program, supports sales-force allocation based on field-validated analytical estimates of future revenue opportunity in each operational market segment. Revenue opportunity estimates are generated by defining the opportunity as a high percentile of a conditional distribution of the customer's spending, that is, what we could realistically hope to sell to this customer. We describe the development of both sets of analytical models, the underlying data models, and the Web sites used to deliver the overall solution. We conclude with a discussion of the business impact of both initiatives.

Purpose – The purpose of this article is to investigate how national-level characteristics such as country wealth, a floating exchange rate and European Union (EU) membership influence firm-level perceptions of competition and firm-level innovation. Greater understanding of these relationships can promote more effective policymaking as well as add to the existing academic conversation regarding national factors and firm competitiveness. Design/methodology/approach – The authors’ data consist of a panel of 27 countries in Central and Eastern Europe and Central Asia from 2002 to 2009 with a total of nearly 27,000 firms from the World Bank Enterprise Survey. The authors utilize a multinomial logistic regression to estimate firm-level perceptions of both domestic and foreign competition upon decisions to introduce new products and manage new product costs. The authors then estimate the probability of innovation (introduction of a new product/service, obtaining international quality certification) using a logistic regression. The marginal effects of the key explanatory variables for country wealth, floating exchange rate and EU membership are calculated. Findings – While EU membership heightens perceptions of competition, firms in the EU are less likely to introduce new products or services. On the other hand, a firm in an EU member country is more likely to obtain international quality certification than one that is not. Both country wealth and a floating exchange correlate with enhanced perceptions of competition and innovation as expected. Originality/value – The first finding regarding heightened perceptions of competition yet lower likelihood of introduction of new products/services among EU firms is surprising. Beyond adding to the empirical store of knowledge regarding the relationship of national factors to firm competitiveness, it suggests that more needs to be done with regard to innovation policy. The authors offer a general recommendation to employ more public–private partnerships for innovation among small and medium enterprises, as this has been effective in other parts of the world.