Publication Type
Journal Article
Version
acceptedVersion
Publication Date
6-2016
Abstract
Studies of how firms respond to host country risk have assigned explanatory primacy to organizational capability and managerial risk preference. The organization-level account is built on the premise that capability is a prerequisite for risk-taking while the individual-level account focuses on the managers' intrinsic behavioral attitude. Without integrating one with the other, the former is open to many alternative explanations while the latter remains only a source of heterogeneity. We propose that employing the microfoundations approach can address the limitations of each account and yield a fuller understanding of FDI risk-taking. Drawing upon behavioral decision theory and the concept of risk propensity, we describe the lower-level mechanisms that generate the empirical regularity between firm experience and risk-taking, which has been attributed to the macro-level capabilities paradigm. We finalize the framework with an account as to how individual-level mechanisms can be incorporated into the context of organizational strategic decision-making.
Keywords
Country risk, Risk propensity, Microfoundations, Behavioral decision-making, Experience
Discipline
Finance and Financial Management | International Business | Strategic Management Policy
Research Areas
Strategy and Organisation
Publication
Journal of International Management
Volume
22
Issue
2
First Page
131
Last Page
146
ISSN
1075-4253
Identifier
10.1016/j.intman.2016.02.001
Publisher
Elsevier: 24 months
Citation
BUCKLEY, Peter J.; CHEN, Liang; CLEGG, L. Jeremy; and VOSS, Hinrich.
Experience and FDI risk-taking: A microfoundational reconceptualization. (2016). Journal of International Management. 22, (2), 131-146.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7292
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.intman.2016.02.001
Included in
Finance and Financial Management Commons, International Business Commons, Strategic Management Policy Commons
