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Behavioral Elements in Foreign Direct Investment Decisions

In: Standing on the Shoulders of International Business Giants

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  • Yair Aharoni

Abstract

The success of multinational enterprises (MNEs) is at least as much a function of management ability and behavior as it is of industry characteristics or environmental factors. These managers display human limitations that affect judgment. Yet international business (IB) researchers tend to ignore management in their research, treating the firm as a black box. To the extent top management team (TMT) is considered, rational behavior in classical economic sense is assumed. Behavioral elements were studied by others in different fields. Clearly, managers behave according to different rules than those assumed in much of the IB literature. Further, managers are not part of a herd but unique. The result of such a lacuna is that theory fails to predict actual behavior and does not allow best guidance for policy options. The chapter summarizes research on behavioral decision making and calls for its application in future research in international business.

Suggested Citation

  • Yair Aharoni, 2024. "Behavioral Elements in Foreign Direct Investment Decisions," World Scientific Book Chapters, in: Arie Y Lewin & Ravi Ramamurti & Elizabeth L Rose (ed.), Standing on the Shoulders of International Business Giants, chapter 10, pages 111-151, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811287510_0010
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    More about this item

    Keywords

    International Business; Internationalization; Strategy; Service Economy; Start-Up High-Technology Companies; High-Technology; Managerial Decision-Making; Business Education; State-Owned Enterprises; Small- and Medium-Sized Enterprises;
    All these keywords.

    JEL classification:

    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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