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ABSTRACT

This study borrows the theoretical framework developed by Lee and Habte-Giorgis (2004) to empirically assess the sequential relationships between firm strategic factors, foreign direct investment (FDI) activity, and financial performance for a sample of U.S.-based multinational agribusinesses. After using hierarchical regressions and path analysis, this study finds a positive direct effect of FDI on performance, a complementary effect between FDI and firm strategic factors (positive and significant interaction terms) on performance, and a positive effect of FDI on performance given a threshold for firm size. Specifically, it provides insights about the direct effect of FDI on performance, as well as about the joint effect of firm size and FDI, marketing intensity and FDI, and capital intensity and FDI on performance. These findings provide evidence that FDI activity is an important factor for U.S. agribusiness financial strength. [JEL classifications: F230, Q130, L250].