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

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jwb.2019.101040

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