Value and Cost of Multinationality: International Diversification and Real Options Effects

In this research, we examine the moderating impacts of external uncertainty and portfolio ownership on the values and costs of multinationality by comparing international diversification and real options effects. We find from Korean FDI data that uncertainty strengthens the negative value of breadth in low level of multinationality, while ownership weakens. Meanwhile, in high level of multinationality, uncertainty strengthens the positive value of multinationality while ownership weakens. While the first results support international diversification perspective, the second results support real options view.