UGF Lecture 5

Management > Global Firm > Oligopolies > Studies

Studies

Two studies compared the timing of FDI moves by firms from particular national industries with the level of competition in these industries.

1. Knickerbocker (1973) analysed the timing of investments by firms from US industries into foreign countries.
2. Flowers (1976) examined the timing of investments in the US by firms in particular industries from other countries, such as Canada, UK, Netherlands, Germany and France.

They measured to see is when a firm from industry A in country X sets up a plant country Y, other firms in AX will consider matching the move. The interest in A will be expected to depend on the level of concentration in X.

If there are few firms (industry is highly concentrated) and the first mover could gain big advantages from its new operations in Y, then those firms remaining in X will be negatively affected. Thus it is predicted that there will be a bunching of moves of firms into Y.

Hypothesis testing

Conclusions

Other studies