The Impact of Operational Flexibility on FDI Performance

• Main Authors: Chia Yu Ting, 丁嘉昱
• Other Authors: Hsien Chang Kuo
• Format: Others
• Language: zh-TW
• Published: 1999
• Online Access: http://ndltd.ncl.edu.tw/handle/69867020152017981761

碩士 === 國立暨南國際大學 === 國際企業學系 === 87 === International investments are exposed to a wide range of risks. Miller (1993) classifies potential risks that MNEs would face into six categories: the uncertainty of government policies, macroeconomic situation, resources and services, product market and demand, competition, as well as technology in the industry. Recently, variety of market demands, keen competitions among competitors, and impacts from financial crisis of South East Asia all make international business environment fluctuate more greatly than before. And the higher market volatility would induce more risks in international business environment. If MNEs do not do anything to prevent the risks, the operation performance might fluctuate with them. In order to cope with the volatility, MNEs'' strategies must be flexible. As the reason, operational flexibility would play a crucial role nowadays. In our research, we follow the definition by Buckley and Casson(1998) and apply resource based theory to conceptualize operational flexibility. We discuss operational flexibility in three ways: flexibility toward external environment, adaptability toward business boundary and mobility within internal organization. To measure operational flexibility, ten items are developed according to the definitions of the three categories. And we apply factor analysis to simplify these ten items. The result shows that five dimensions can be used to evaluate operational flexibility of a foreign subsidiary. These five are "adaptability toward market", "ability of resource allocation"," adaptability toward external environment", "liquidity of market information" and "empowerment of a subsidiary". And these five dimensions are used to exam the relationship between flexibility and FDI performance in our study. As to examining the relationship between operational flexibility and FDI performance, we apply multiple regression to test it. The empirical result shows these five dimensions of flexibility have positive and significant effects on FDI performance. The result proves the point of views which Buckley and Casson(1998) have carried out. For the purpose of understanding how financial crisis have impacts on FDI performance and how flexibility works during the period of financial crisis, we collect two periods of data - before and after financial crisis. And this research classifies the changing status of performance- before and after financial crisis- into three categories: "degradation of performance", " maintenance of performance" and " improvement of performance". We use ordered probit model to analysis what reasons affect the changing status of performance. The result shows that "changing of adaptability toward market", "changing of ability of resource allocation"," changing of adaptability toward external environment" and "changing of liquidity of market information" would positively and significantly affect the changing status of FDI performance. Summarizing the empirical results of this research, we have conceptualized operational flexibility and found five dimensions, which can be used to evaluate operational flexibility. And operational flexibility has been proved to play an important role while evaluating FDI performance.