International entrepreneurship: Foreign direct investment by small U.S.-based manufacturing firms

This thesis compares the foreign investment behavior of small and large U.S.-based manufacturing firms. Three questions that characterize that behavior are asked: who invests abroad, from what industries do foreign investors originate; where do they invest, in what countries do they invest; and, how do they invest, what affiliate ownership policies do they follow. It applies ideas from: the economic theory of the firm; competitive strategy; and, entrepreneurial management to 1982 data on the 1,215 U.S. parents and their 11,231 affiliates that make up the universe of U.S. foreign investors from manufacturing industries. Parents are classified into four size categories based on U.S. employment and assigned to one of 58 industries based on their main activity.;The choice between establishing majority and minority-owned affiliates defines ownership policy.;The variations in foreign investment behavior by size of firms are predictable only when one goes beyond economic theories of the firm and includes competitive strategy and entrepreneurial management concepts in the analysis.;Smaller parents make up half of all U.S. parents. Most originate from high R&D, fast growing, and emerging industries where flexible management processes provide an edge over host-country and over large multinational competitors. Small parents seem to rely more on gaining competitive advantage from their international activities than on exploiting domestic advantages. Accordingly, they tend to locate affiliates in developed countries where they establish proportionally more majority-owned affiliates than large parents. Their ability to establish majority-owned affiliates rests on the small foreign investors' entrepreneurial management processes.;Industry and host country characteristics expected to highlight the effect of firm size on foreign investment behavior are analyzed. Techniques are developed to calculate maturity and other industry characteristics and to aggregate data.;The few small parents with investments in developing countries differ from their developed country brethren. They have few majority-owned affiliates and cluster them into homogeneous countries so as to amortize costs of adapting products, processes, and marketing systems to host country conditions.