We study the resource allocation decisions of U.S. multinational corporations (MNCs). We examine how established MNCs grow across countries and how firm-specific resources and host-country financial-market development influence MNC growth. We find no evidence of within-firm tradeoffs to growth in MNCs with greater organizational capital, knowledge resources and access to financing. However, when these resources are in scarce supply, our evidence suggests MNC growth involves trade-offs between divisions. We also examine how trade-offs togrowthvarywithhostcountry financial market development. In countries with less developed capital markets, we find significant within- MNC trade-offs to growth between affiliates and their U.S. parents. These tradeoffs diminish over time as local capital markets develop and become more integrated with world financial markets
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