• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Finance.
    • Frequency: Semiannually
    • DOI: 10.18178/IJTEF
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    • Managing Editor: Ms. Inez. Chan

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HOME > Archive > 2026 > Volume 17 Number 2 (2026) >
IJTEF 2026 Vol.17(2): 203-209
DOI: 10.18178/ijtef.2026.17.2.791

Financial Hedging and Operational Flexibility in a Multinational Network

Chenchen Di
Chenchen Di
School of Management and Economics, The Chinese University of Hong Kong, Shenzhen, China
Email: dichenchen@cuhk.edu.cn

Manuscript received June 13, 2026; accepted September 2, 2026; published September 17, 2026.

Abstract—This paper examines the relationship between financial hedging and operational flexibility within a Multinational Corporation (MNC). We develop a formal model of two corporate structures: an expansion MNC that operates in a single product market across multiple countries, and a diversified MNC that operates across different product markets. The model shows that financial hedging and operational flexibility may function either as substitutes or as complements. The nature of this relationship depends on three key factors: return volatility, redeployment costs, and managerial risk aversion. By integrating these factors into a single framework, the paper helps reconcile the mixed findings in the literature on the interplay between these two important risk-management strategies in MNCs.


Keywords—financial hedging, real options, operational flexibility, complements, substitutes, risk aversion


Cite: Chenchen Di, "Financial Hedging and Operational Flexibility in a Multinational Network," International Journal of Trade, Economics and Finance, vol.17, no. 2, pp. 203-209, 2026.

Copyright © 2026 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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