Downside Risk Implications of Multinationality and International Joint Ventures

Reuer, Jeffrey J.; Leiblein, Michael J.

doi:10.5465/1556377

Cited by 96 publications

(190 citation statements)

References 43 publications

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“…In recent years, the Real Option Approach (ROA) to capital budgeting, and its associated real option valuation models, have been gaining prominence in the strategy literature (e.g., Bowman and Hurry, 1993;Folta and Miller, 2002;Kogut and Kulatilaka, 1994;McGrath, 1997;Reuer and Leiblein, 2000). A real option gives a firm the right, but not the obligation, to take a certain action, sometime in the future, at some cost.…”

Section: Valuation Frameworkmentioning

confidence: 99%

Strategic Implications of Valuation: Evidence from Valuing Growth Options

Alessandri¹,

Lander²,

Bettis³

Advances in Strategic Management

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Strategy is ultimately aimed at creating shareholder value, placing valuation in a central role linking finance and strategy. Focusing on growth options, this paper uses a unique -perfect information‖ model to examine, from a strategy point of view, the relationship between the market value of the firm and its intrinsic, or DCF, value. Although the research is at the level of the firm, the results have implications at the level of individual strategies and projects, since a firm can be conceptualized as a collection of projects. The findings highlight the relationship between the value of growth options and macroeconomic conditions, industry characteristics, and firm-specific factors.

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Section: Valuation Frameworkmentioning

confidence: 99%

Strategic Implications of Valuation: Evidence from Valuing Growth Options

Alessandri¹,

Lander²,

Bettis³

Advances in Strategic Management

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“…Since higher munificence shows higher opportunities the performance of strategic decisions in such environments will be higher ( [27]; [28]). …”

Section: Environmental Munificencementioning

confidence: 99%

“…Therefore financial condition such as return on assets and financial slacks will directly affect strategy selection decision. [30]; [28]; [31] Focal firm Product variety (C22) [31]; [34] Focal firm Market knowledge (C23) [22] Focal firm International experience (C24) [22] Focal firm Financial condition (C25) [22]; [27]; [32]; [28] Similar to the firm's internal aspects the partner firm's internal aspects such as size, product variety, market The nature of the decision such as the prior experiences between the partners is also very important for the decision making process ( [38]; [39]). Table 3 summarizes decision related factors.…”

Section: Focal Financial Performancementioning

confidence: 99%

“…Although it can be regarded as a part of environmental munificence, according to the managers size has a strong effect on strategic decisions and should be considered separately. [4]; [29]; [30]; [31]; [27]; [32]; [33] Environmental munificence (C12) [4]; [30]; [27]; [34]; [28]; [34]; [33]; [35] Industry size (C13) [27] 2.1.…”

Section: Industry Sizementioning

confidence: 99%

“…But since it increases the complexity it may have a negative effect on strategic decision performance. Either of the conditions show a strong relation between a firm's size and its strategic decision ( [22]; [30]; [36]; [28]; [31]; [37]). Table 2 shows the focal firm related factors.…”

Section: Focal Firm Sizementioning

confidence: 99%

See 2 more Smart Citations

Strategic Decision Selection Using Hesitant fuzzy TOPSIS and Interval Type-2 Fuzzy AHP: A case study

Onar¹,

Öztayşi²,

Kahraman³

2014

IJCIS

142

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Strategic decisions such as mergers, acquisitions and joint ventures have a strong effect on firm performance. In order to be successful in highly competitive environments firms have to make right and on time strategic decisions. However, the nature of making the right strategic decision is complex and unstructured since there are many factors affecting such decisions. Moreover these factors are usually hard and vague to evaluate numerically. This study tries to develop a multicriteria decision-making model which considers both the complexity and vagueness of strategic decisions. The weights of the factors are determined by interval type-2 Fuzzy Analytic Hierarchy Process (AHP) and then the best strategy is selected by Hesitant Fuzzy TOPSIS using the determined weights. An application to a multinational consumer electronics company is presented.

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Foreign Subsidiary Exit from Africa: The Effects of Investment Purpose Diversity and Orientation

Getachew

Beamish

2017

Global Strategy Journal

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Research Summary This study considers the exit likelihood of foreign subsidiaries operating in Africa and identifies strategic orientations that can improve their chances of survival. We find that, on average, subsidiaries entering the African market have a greater exit likelihood than those entering the OECD market. However, those subsidiaries entering the African market with diverse investment purposes or greater market‐seeking orientation are less likely to exit, as they tend to enjoy flexibility, adaptability, and learning advantages useful in mitigating economic challenges and/or tapping into strategic opportunities. Managerial summary This study examines how the decision to enter African markets relates to the exit probability of MNE subsidiaries. Using a longitudinal, paired‐sample design of Japanese foreign subsidiaries operating in Africa and OECD countries, we find that entry to Africa increases the hazard rate of subsidiaries, but that subsidiaries entering with more diverse investment purposes and greater market‐seeking orientation have a better survival likelihood. Consistent with the institutional‐based theory of corporate diversification, our findings introduce purpose diversity and market‐seeking orientation as potential mechanisms to mitigate the hazards of institutional voids/instability. Also, by looking at the phenomenon of within‐subsidiary diversity (of purposes) and its interaction with institutional conditions, we advance the notion of subsidiary scope and its implications. Copyright © 2016 John Wiley & Sons, Ltd.

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Downside Risk Implications of Multinationality and International Joint Ventures

Cited by 96 publications

References 43 publications

Strategic Implications of Valuation: Evidence from Valuing Growth Options

Strategic Implications of Valuation: Evidence from Valuing Growth Options

Strategic Decision Selection Using Hesitant fuzzy TOPSIS and Interval Type-2 Fuzzy AHP: A case study

Foreign Subsidiary Exit from Africa: The Effects of Investment Purpose Diversity and Orientation

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