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T HIS paper presents the results of an empirical study of the distinguishing characteristics of United States manufacturing corporations with foreign subsidiaries. My conclusions are drawn from two sets of data: the first covers 1191 manufacturing corporations, 576 of which owned a majority interest in a Canadian subsidiary in 1967. My second set of data, a subset of the first, covers Fortune's 500 largest industrial corporations, 187 of which qualified for the designation of the Harvard Business School.' I hope to draw some basic inferences about the direct investment process by comparing the characteristics of those firms investing in Canada with those not doing so, of those which are multinational with those which are not, and those which are multinational with those investing in Canada, if not in, six other countries. In order to put the contribution of this paper into proper historical perspective, let me comment briefly on the existing literature on why firms invest abroad. Earlier research has tended to fall into one of two categories: studies of the characteristics of the industries in which foreign investing is comparatively heavy, or studies of the characteristics of the individual firms investing abroad. The industrial studies are far more common (owing largely, one suspects, to the easier access to industry data) and have been thoroughly surveyed in a recent paper by Richard Caves. His conclusions in a nutshell were:
Thomas Horst (Tue,) studied this question.
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