Research summary:Prior research focused on cultural differences and their impact on foreign direct investment (FDI), neglecting other potentially relevant variables attesting to the cultural interaction between a multinational enterprise and its host environment. In this article, we draw on interpersonal attraction research to develop a positive approach to cross-cultural interaction with the cultural attractiveness (CA) construct, whereby members of a focal culture view another culture as desirable. We create a CA measure and establish its predictive validity with country reputation data. Using FDI data for 41 nations from 1985 to 2012 and performance data for 8,519 cross-border acquisitions (CBA) for 40 nations from 1990 to 2009, we find that CA is a predictor of FDI inflows and CBA outcomes, whose explanatory power is superior to cultural difference measures. Managerial summary: Practitioners have traditionally emphasized potential difficulties of cross-cultural interaction when dealing with culturally distant countries. In contrast, our study addresses the positive aspects of cultural differences and suggests that a lot can be gained from dealing with attractive cultures, even when they are different. This insight can be helpful, for example, in contemplating/managing international M&As. Managers of acquiring/merging firms can use our approach to identify whether their employees find the partner's culture desirable, and if they do, proceed with the takeover and then adopt the partner's organizational routines during post-merger integration. This approach can help avoid conflicts, improve performance of home country expatriates, and ultimately, create value for acquiring firms.

Research on foreign direct investment has focused considerable attention on the moment of market entry, but less on the dynamics of investment in the post-entry phase. This paper centres the influence of uncertainty on investment, and develops a growth options model to explain the sequence of investment in new foreign subsidiaries. In a learning process that starts at entry, investors perceive receding levels of uncertainty and shift their reason for investment from option values towards net present values. The findings of a panel study of 634 German subsidiaries support the propositions and reveal the potential of the real options approach to improve the understanding of internationalisation processes. Journal of International Business Studies (2008) 39, 370–386. doi:10.1057/palgrave.jibs.8400362

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Research Summary Why do some firms increase R&D investments in the face of uncertainty, while others do not? Contrary to common wisdom, this study posits that uncertainty prompts firms to invest in R&D. The value to invest under uncertainty is, however, bounded by a firm's learning conditions (i.e., human capital, relatedness of innovation activities, and industry maturity). An empirical test on a cross‐industry panel of 551 business divisions of manufacturing firms reveals how organization‐environment interactions determine the firm‐specific value to invest in learning prior to full‐scale commercialization. The insights help to bridge real options theory and the learning literature. Managerial Summary Uncertainty about the market environment makes investment decisions in R&D and the commercialization of new products a challenge: should firms “wait and see” until uncertainty resolves to avoid the risk of betting on the wrong product or commit further resources regardless? Our analysis suggests that manufacturing firms often take a mixed approach (“act and see”). While deferring investments in the commercialization of new products, they undertake further R&D to inform decision making by insights that would otherwise be unavailable. However, we find that the benefit of such practice depends on the learning conditions of the individual firm. What is risky for firms with disadvantages in human capital and technology development is value enhancing for firms with good foundations for learning through R&D.