Uncertainty and foreign direct investment: the role of moderators

Abstract

The strength of the relationship between uncertainty and the firm′s decision to engage in foreign direct investment (FDI) is moderated by factors such as capital intensity and firm size. Recognizes two types of uncertainty, internal and external. Develops specific hypotheses about how the influence of external uncertainty on FDI is conditioned by certain moderators. Not enough is known about how internal uncertainty affects the FDI to develop specific predictions about moderators. However, these effects are empirically determined. Uses data on US international service firms to test the various effects using logistic regression. Results suggest that the moderators affect both the strength and the direction of the impact that internal and external uncertainty have on foreign direct investment.