Title

Stimulating firm-specific investment through risk management

Publication Type

Journal Article

Publication Date

2003

Abstract

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.

Discipline

Business Administration, Management, and Operations | Finance and Financial Management

Research Areas

Finance

Publication

Long Range Planning

Volume

36

Issue

1

First Page

49

Last Page

59

ISSN

0024-6301

Identifier

10.1016/S0024-6301(02)00203-0

Publisher

Elsevier