MANAGING EXPOSURE OF DIRECT FOREIGN INVESTMENT TO POLITICAL RISK: THE CASE OF FOOD BUSINESSES IN CHINA

Direct foreign investment (DFI) allows a multinational corporation (MNC) to generate and appropriate extra-normal profits from its unique assets in a foreign market. China has become increasingly attractive for foreign investment over the past 20 years. This entails political risk, but MNCs can reduce the risk by relying heavily on MNC-specific assets, often in the form of tacit knowledge. A joint venture with a local partner creates an incentive for a local stakeholder to shield the DFI from political risks and allows the partner to contribute location-specific assets to the venture, further reducing the MNC’s risk.


Issue Date:
1998
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/34511
Published in:
International Food and Agribusiness Management Review, Volume 01, Issue 3
Page range:
359-372
Total Pages:
14




 Record created 2017-04-01, last modified 2017-04-27

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