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Political risk and MNC's location decision - a dynamic perspective

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dc.contributor.advisor Samii, Massood Rajamanickam, Mohana 2010-09-03T14:43:51Z 2010-09-03T14:43:51Z 2006
dc.description.abstract This thesis builds a dynamic modeling tool for analyzing the impact of political risk on the production location decisions of multinational corporations (MNCs). The choice of location by MNCs involves various decisional factors and the time- dependent interactions among them. A sophisticated location analysis has to incorporate these complexities in a holistic perspective. The combined impact of learning and political risk on the location decision was studied in this thesis through computation simulation. The key findings are as follows. a) The cost of operating in a host country increases with increasing political risk. Hence, a country with high political risk receives increasing investment at a later point in time than a country with lower political risk. From a country’s national perspective, FDI policy makers need to focus on reducing the transaction cost due to political risk in order to receive earlier investments .b) An increased rate of learning by MNCs helps to reduce their transaction costs and this helps them expand internationally at an earlier stage compared to a slower learning MNC. A fast learning MNC in a risky environment can outpace a slow learner in terms of lower operating costs and profitability. It thus follows that MNCs need to consider the risk of the host country in combination with their learning capacity when evaluating international production locations. c) If the alternative location choice is a cheaper destination but has high political risk, smaller MNCs cannot gain a cost advantage by investing in such a host country because they lack economies of scale necessary to utilize this potential advantage. It only makes economic sense for large MNCs to move their production locations to riskier countries for cost advantages. Finally, the dynamic methodology employed in this thesis is a novel analytical contribution to the discipline of international business. By altering the variables in the simulation model, various scenario analyses specific to a firm and country can be performed which can be of value for FDI decision makers in a variety of settings including corporate strategy, marketing, finance and economic and social policy. (Author abstract) en_US
dc.format.extent 2229645 bytes en_US
dc.language.iso en_US en_US
dc.publisher Southern New Hampshire University en_US
dc.relation.requires Adobe Acrobat Reader en_US
dc.rights Author retains all ownership rights. Further reproduction in violation of copyright is prohibited en_US
dc.subject.lcsh Southern New Hampshire University -- Theses (International Business) en_US
dc.subject.other risk management en_US
dc.subject.other political risk en_US
dc.subject.other globalization en_US
dc.subject.other multinational corporations en_US
dc.subject.other decision making en_US
dc.subject.other political risk en_US
dc.title Political risk and MNC's location decision - a dynamic perspective en_US
dc.type Dissertation en_US
dc.contributor.committeeMember Aybar, Bulent
dc.contributor.committeeMember Dhakar, Tej S.
dc.contributor.committeeMember Fellman, Philip Vos
dc.description.bibliographicCitation Rajamanickam, M. (2006). Political risk and MNC's location decision - a dynamic perspective. Retrieved from en_US Doctor of Business Administration (D.B.A.) en_US
dc.description.program International Business en_US School of Business en_US
dc.digSpecs Creation software: Adobe Acrobat Professional 9.3 en_US
dc.format.mediaType PDF en_US
dc.rightsHolder Rajamanickam, Mohana

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