The thesis "The International Operations of National Firms: A Study of Direct Foreign Investment" by Stephen Herbert Hymer, submitted to the Massachusetts Institute of Technology in 1960, explores the motivations and dynamics of direct foreign investment. Hymer challenges the theory that capital movements are primarily driven by interest rate differences, arguing that direct investment is more influenced by the extent of international operations of firms. The thesis identifies two main causes of international operations: (1) removing competition between enterprises in different countries, and (2) exploiting advantages in certain industries by controlling enterprises in foreign countries. Hymer suggests that the amount of capital associated with international operations depends on the imperfections in the capital market, and that firms often finance their international operations by borrowing locally rather than raising funds from their home country. The thesis also examines the effects of international operations on income, technical knowledge, and centralized control, and discusses the role of firm nationality in these operations. The empirical evidence supports the thesis's conclusions, showing that direct investment is not primarily driven by interest rate differences but by the need to control foreign enterprises.The thesis "The International Operations of National Firms: A Study of Direct Foreign Investment" by Stephen Herbert Hymer, submitted to the Massachusetts Institute of Technology in 1960, explores the motivations and dynamics of direct foreign investment. Hymer challenges the theory that capital movements are primarily driven by interest rate differences, arguing that direct investment is more influenced by the extent of international operations of firms. The thesis identifies two main causes of international operations: (1) removing competition between enterprises in different countries, and (2) exploiting advantages in certain industries by controlling enterprises in foreign countries. Hymer suggests that the amount of capital associated with international operations depends on the imperfections in the capital market, and that firms often finance their international operations by borrowing locally rather than raising funds from their home country. The thesis also examines the effects of international operations on income, technical knowledge, and centralized control, and discusses the role of firm nationality in these operations. The empirical evidence supports the thesis's conclusions, showing that direct investment is not primarily driven by interest rate differences but by the need to control foreign enterprises.