What Constitutes the Costs and Advantages of Firms Investing Overseas?


Baruch College, New York, New York, USA. E-mail: lilach_nachum@baruch.cuny.edu


Different theoretical perspectives offer conflicting views regarding the sources of costs and advantages of firms investing overseas. Empirical analyses of financial services affiliates in London illustrate considerable inconsistencies with the predictions of Multinational Enterprise (MNE) theory regarding the significance of these attributes and their classification as costs or advantages. These analyses suggest that the performance consequences of the costs and advantages depend on a variety of contingencies and change significantly over time, questioning the categorical assignment of these attributes as costs or advantages in MNE theory. The findings provide a basis for adequate and nuanced strategic treatment of the costs and advantages. Copyright © 2011 John Wiley & Sons, Ltd.