Publication Type
Journal Article
Version
acceptedVersion
Publication Date
1-2020
Abstract
FDI research has presented consistent evidence that firm experience moderates the effect of risk on entry in a new foreign market. This conclusion is contested by recent research. By revisiting the conceptualisation of risk by economists and behaviourists, we show that the proposed learning mechanism only applies to endogenous risk, not exogenous risk. As assessing endogenous risk involves self-evaluation of risk-reducing capability, it is posited that firms have differential tendencies to take such risks even when experience and ownership are accounted for. We find both observed and unobserved variations in firms' responses to endogenous risk, as opposed to exogenous risk.
Keywords
Location choice, Experience, Political risk, FDI, Behavioural theory
Discipline
International Business | Strategic Management Policy
Research Areas
Strategy and Organisation
Publication
Journal of World Business
Volume
55
Issue
1
First Page
1
Last Page
11
ISSN
1090-9516
Identifier
10.1016/j.jwb.2019.101040
Publisher
Elsevier
Citation
BUCKLEY, Peter J.; CHEN, Liang; CLEGG, L. Jeremy; and VOSS, Hinrich.
The role of endogenous and exogenous risk in FDI entry choices. (2020). Journal of World Business. 55, (1), 1-11.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7212
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jwb.2019.101040