Stimulating firm-specific investment through risk management
This article suggests a rationale for firm risk management that has been largely ignored in financial economics literature. It presents an argument for harnessing the influence of a company’s stakeholders who, whether as employees, suppliers or customers, make a valuable investment specific to the company. Such investments are crucial for a firm’s competitive advantage, yet because they are firm-specific and therefore cannot be transformed or transferred, stakeholders are often concerned about the risks involved in making them. A company’s efforts to manage risk can therefore persuade stakeholders to make even greater firm-specific investments, bringing benefits to shareholders and stakeholders alike.
Business Administration, Management, and Operations | Finance and Financial Management
Long Range Planning
WANG, Heli; Barney, JB; and Reuer, J.
Stimulating firm-specific investment through risk management. (2003). Long Range Planning. 36, (1), 49-59. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/3457