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Flexibility in internationalization: is it valuable during an economic crisis?

Strategic management journal, 2009-05, Vol.30 (5), p.537-555 [Peer Reviewed Journal]

Copyright 2009 John Wiley & Sons, Ltd. ;Copyright © 2009 John Wiley & Sons, Ltd. ;Copyright Wiley Periodicals Inc. May 2009 ;ISSN: 0143-2095 ;EISSN: 1097-0266 ;DOI: 10.1002/smj.742 ;CODEN: SMAJD8

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Title:
Flexibility in internationalization: is it valuable during an economic crisis?
Author: Lee, Seung-Hyun ; Makhija, Mona
Subjects: Business management ; Business structures ; Corporate strategies ; Economic crises ; Economic crisis ; Economic value ; Empirical research ; export ; Financial investments ; Flexibility ; Foreign direct investment ; Foreign direct investments ; Foreign investment ; Foreign investments ; Globalization ; Internationalization ; Investment strategies ; Investment value ; Management science ; real options ; Securities sales ; Strategic management ; Studies ; uncertainty
Is Part Of: Strategic management journal, 2009-05, Vol.30 (5), p.537-555
Description: This study investigates the value of the strategic flexibility provided by firms' international investments during an economic crisis, defined here as an unanticipated significant downturn in the economy. To avoid below-par performance, firms need to adapt quickly to this significant change in their environment, making real options very valuable to them. Although firms' international investments can potentially provide such flexibility, this issue has not been empirically examined in a context of such dramatic negative change. We consider two types of international investments by firms in this regard, foreign direct investments and export-related international investments, developing two measures that directly assess the flexibility derived from each that are new to the literature. Based on these measures, we find evidence that both types of international investments provided valuable flexibility for Korean firms during the economic crisis conditions. This study contributes to the literature by showing that firms with real options investments in place have a greater ability to flexibly adapt their overall operations in line with unforeseen negative environmental change, in contrast to firms without such investments.
Publisher: Chichester, UK: John Wiley & Sons, Ltd
Language: English
Identifier: ISSN: 0143-2095
EISSN: 1097-0266
DOI: 10.1002/smj.742
CODEN: SMAJD8
Source: Alma/SFX Local Collection

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Flexibility in internationalization: is it valuable during an economic crisis?

Copyright 2009 John Wiley & Sons, Ltd. ;Copyright © 2009 John Wiley & Sons, Ltd. ;Copyright Wiley Periodicals Inc. May 2009 ;ISSN: 0143-2095 ;EISSN: 1097-0266 ;DOI: 10.1002/smj.742 ;CODEN: SMAJD8

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