The 4th SERI Strategy Seminar will be held on Jun. 24 at Tsinghua Univ. Here are the details about the seminar.

Topic: Real Options and Corporate Strategy

Who: Prof. Tony Tong, State Univ. of New York, Buffalo

When: 1:30 pm., Jun. 24（Friday）

Where: Weilun Building, Room (North) 401, Tsinghua Univ.

Organizer: Department of Business Strategy and Policy + Department of Technological Economics and Management, Tsinghua SEM.

Abstract：

In this study, we investigate how foreign direct investment (FDI) and multinationality affect firms’ risk levels. Our investigation builds on the idea from real options theory that international operations offer multinational corporations (MNCs) switching options, yet we also emphasize different sources of coordination costs that can mitigate the benefits of operational flexibility. The findings from Heckman models and Tobit two-stage models with selectivity underscore the importance of unobserved heterogeneity in the relationship between foreign investment and organizational risk. Consistent with the coordination costs surrounding international operations, we find that the relationship between multinationality and downside risk is curvilinear: risk first declines and then increases as a firm’s portfolio of international investments becomes extensive. In addition, downside risk is an increasing function of the average cultural distance between a firm’s home base and the host countries in which its foreign subsidiaries operate.

Prof. Tong is an upcoming and very active strategy scholar. He recently has two top-tier journal publications on the topic he will present at the seminar. It would be a very helpful and informative talk. We sincerely wish all of you would be able to join us.