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Strategic incentives for multinational operations
Author(s) -
Veugelers Reinhilde
Publication year - 1995
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090160107
Subject(s) - multinational corporation , incentive , strategic complements , industrial organization , outcome (game theory) , business , first mover advantage , set (abstract data type) , microeconomics , simple (philosophy) , economics , computer science , epistemology , programming language , philosophy , finance
A simple game‐theoretic model is set up to analyze when strategic considerations may dominate and possibly counteract the traditional motives for MNE operations such as locational and firm‐specific advantages. Firms can choose to operate internationally out of defensive considerations to avoid a worse outcome where they would have to compete with rival MNEs while not enjoying the cost advantages associated with multinational operations. The model further specifies when the timing of the decision to become a MNE may entail strategic advantages, with the first mover restricting the multinational expansion of its rival.