Investment and industrial expansion. A corporate variables framework
The article proposes that firm investment and, in turn, industry expansion are determined by firm-specific corporate variables in addition to the typically considered variables characterizing the firm's experience and expected conditions in a given market, such as rate of growth of demand, price and cost of capital. Defined to represent the internal characteristics of firms, the particular corporate variables hypothesized to affect investment behavior include cash flow, firm-specific assets, internal firm structure, and corporate strategy. The choice of the postulated corporate variables is motivated by the presence of factors associated with the failure or absence of markets: an uncertain and complex environment, the irreversibility of much capital investment, information asymmetry and organizational boundaries. © 1983.
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