Journal of International Business Studies

, Volume 43, Issue 5, pp 525–535 | Cite as

Travel time and the liability of distance in foreign direct investment: Location choice and entry mode

  • Kevin K Boeh
  • Paul W Beamish
Research Note


Measures of geographic distance are often used to proxy for the impact of spatial separation on firm decisions and performance. We develop a construct, dyad travel time, to measure the friction of interacting and costs of uncertainty from ex post behavioral monitoring across non-collocated sites. We measure the actual time required to travel between 1171 parent–subsidiary dyads, and show that dyad travel time (but not geographic distance) has significant predictive power in firm governance and location decisions. While prior literature has independently modeled these, we specify a simultaneous model offering stronger support for the interrelation of these decisions.


geographic distance travel time entry mode transaction costs FDI 



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Copyright information

© Academy of International Business 2012

Authors and Affiliations

  1. 1.School of Business, Pacific Lutheran UniversityTacomaUSA
  2. 2.Richard Ivey School of Business, Western UniversityLondonCanada

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