We consider an exporting firm facing FX risk. We show that FX options are not used for hedging, if there is no ex-post production flexibility. Hence, in the standard setting of having no ex-post optionality, hedging with forwards is the best choice.The value of FX options for hedging arises as...

Drawing upon the science of complexity we propose a network-centric, complex-systems internationalization (NCCSI) perspective of firm internationalization that can help us understand observed patterns of internationalization that are difficult to explain using traditional theories. While...

It is widely accepted that a key driver of a firm's international growth is its knowledge on how to compete in foreign markets. Many firms, however, have attained substantial growth in foreign markets even though they have had little prior direct experience in those markets. Based crucially on...

The aim of this paper is to analyze the internationalization strategies followed by enterprises in the world, distinguishing between big enterprises and other firms (SMEs). In particular, we want to delve into determinants of internationalization and processes that allow companies to perform in...

Ownership Advantage, a sub-paradigm of OLI paradigm formulated by J.H. Dunning is a set of determinant factors of foreign direct investment (FDI) and the foreign activities of multinational enterprises (MNEs). For making a strategic decision of FDI MNEs must have some firm specific advantages...

In order to access and exploit knowledge, MNCs are induced to make FDI in technological districts. It occurs in a two-step process: first joint venture and then acquisition. This perspective is consistent with the evolutionary theory of multinational corporations, which looks at technology...

We present a model of risk averse exporting firm subject to liquidity constraints. The firm enters an unbiased futuresmarket to hedge exchange rate risk and may not be able to satisfy high margin calls. Then the firm is forced toprematurely liquidate the futures position. We show that...

What insights can be gained from bringing the theory of the firm to the global economy? I discuss several new features of the world economy that can be explained by incorporating the theory of the firm into the theory of international trade. Among the new features I discuss are the move to...

To serve foreign markets, firms can either export or set up a local subsidiary through horizontal Foreign Direct Investment (FDI). The conventional proximity-concentration theory suggests that FDI substitutes for trade if distance between countries is large, while exports become more important...

We use Spanish firm-level data to test the hold-up model of global sourcing proposed by Antr s & Helpman (2004). We propose a novel representation of the model which guides us in bringing the theory to the data. We estimate a discrete choice model of firms' sourcing behavior, separately for the...