Does Foreign Direct Investment Theory Reflect Reality: The Case of the American Multinational Food Processors

In this paper hypotheses are derived from the foreign direct investment literature regarding the performance of the multinational food processors. As a group, it is expected that the subject firms will perform poorly in the international environment in comparison to other multinationals. It is also considered whether foreign direct investment theory can help identify strategies that might be used by individual firms to improve their performance. To test the first hypothesis a new index of corporate performance is derived. The second set of hypotheses are tested via comparison to actual firm strategies which were presented by corporate executives in interviews. Operations of the subject firms support both the general industry hypothesis and the more detailed firmlevel strategy hypotheses considered in the analysis.