Journal of International Business Studies

, Volume 25, Issue 3, pp 557–578

Multinational Investment under Uncertainty in the Chemical Processing Industries

  • José Manuel Campa
Article

DOI: 10.1057/palgrave.jibs.8490212

Cite this article as:
Campa, J. J Int Bus Stud (1994) 25: 557. doi:10.1057/palgrave.jibs.8490212

Abstract

This study uses a sample of chemical processing industries to evaluate the effect of two types of uncertainty on the decision to invest in an industry. It analyzes the effects of relative price uncertainty, through exchange rates and input prices, and demand uncertainty on the probability of expansion in a particular country. The study then focuses on the behavior of individual companies, and distinguishes companies by whether or not they are multinationals in the production of the product. The results confirm previous evidence that exchange rate uncertainty has a negative effect on capacity expansions by domestic corporations and no effect on investment by multinational corporations. Finally, the study also shows that expansions of production capacity in this industry are more likely to occur in those countries where capacity utilization is higher.

Copyright information

© Academy of International Business 1994

Authors and Affiliations

  • José Manuel Campa
    • 1
  1. 1.New York University