JIBS accepted version (1).pdf (545.89 kB)
Risk propensity in the foreign direct investment location decision of emerging multinationals
journal contribution
posted on 2023-06-09, 08:18 authored by Peter J Buckley, Liang Chen, L Jeremy Clegg, Hinrich VossA distinguishing feature of emerging economy multinationals is their apparent tolerance for host country institutional risk. Employing behavioral decision theory and quasi-experimental data, we find that managers’ domestic experience satisfaction increases their relative risk propensity regarding controllable risk (legally protectable loss), but decreases their tendency to accept non-controllable risk (e.g., political instability). In contrast, firms’ potential slack reduces relative risk propensity regarding controllable risk, yet amplifies the tendency to take non-controllable risk. We suggest that these counterbalancing effects might help explain observation that risk-taking in FDI location decisions is influenced by firm experience and context. The study provides a new understanding of why firms exhibit heterogeneous responses to host country risks, and the varying effects of institutions.
History
Publication status
- Published
File Version
- Accepted version
Journal
Journal of International Business StudiesISSN
0047-2506Publisher
Palgrave MacmillanExternal DOI
Issue
2Volume
49Page range
153-171Department affiliated with
- Strategy and Marketing Publications
Research groups affiliated with
- International Business Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2017-10-16First Open Access (FOA) Date
2017-10-16First Compliant Deposit (FCD) Date
2017-10-16Usage metrics
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