From Access to Acceptance: The Costs of Crossing Borders in the Global Economy

Abstract

This paper provides an overview of the different kinds of distance-related barriers related to crossborder investment. Expanding the economic footprint of the firm comes at the cost of a corresponding increase in the complexity of coordination. Different forms of governance, whether inside the firm or as part of its network of external relationships, have the aim of reducing uncertainty and creating a more predictable environment. The impact of conventional distancerelated barriers, as well as the more difficult institutional barriers reflecting differences in norms and beliefs, on the costs and methods of coordination adopted by multinational firms are explored.

Keywords: transnational firms, foreign investment, governance, entry barriers, institutional distance

JEL Classification: F21, F23, M16