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RESEARCH PRODUCT
To lead or to wait? An application to internationalization strategies under demand uncertainty
Rafael Moner-colonquesMaja Baracsubject
Flexibility (engineering)Strategy and Management05 social sciencesForeign direct investmentManagement Science and Operations ResearchInvestment (macroeconomics)Time value of moneyMicroeconomicsInternationalizationLead (geology)Management of Technology and Innovation0502 economics and businessEconomics050207 economicsBusiness and International ManagementDuopoly050203 business & managementRealization (probability)description
We examine the exports versus foreign direct investment (FDI) decision under demand uncertainty for an asymmetric cost duopoly. One of the firms can lead entry before demand realization or retain flexibility enjoying an informational advantage. When the time value of information is small and for sufficiently low investment costs, follow‐the‐leader behavior in FDI arises. Relatively high investment (fixed) costs result in follow‐the‐leader exporting behavior. When the time value of information becomes significant, the potential leader will opt for a wait‐and‐see strategy. For intermediate values of investment costs, the efficient firm invests, while the rival chooses to export.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2019-05-26 | Managerial and Decision Economics |