Reputation as a Mechanism Alleviating Opportunistic Host Government Behavior against MNEs.

The strategic options available to multinational enterprises and host governments, when the first contemplate investment in the latter's country, are marked by the possibility that no entry eventually will take place as a response to opportunistic behavior on the part of th e host government. This article examines under which circumstances and how, in a dynamic world with asymmetric information, reputation building by the host government can credibly alleviate this opportunistic behavior, leaving a safer climate for multinational enterprises investment. Copyright 1993 by Blackwell Publishing Ltd.