Investor Response to Environmental Risk in Foreign Direct Investment

Abstract

0 the theory of internalization suggests that proprietary assets-usually in the form of advertising and/or marketing capabilities-are the key to understanding a firm's ability to create value in foreign markets. We show that the capacity of a multinational corporation (MNc) to create value in a foreign direct investment (FDi) can also result from the use of an alternative proprietary asset; that is, the skills and management expertise that are acquired through the accumulation of various forms of foreign experience. 0The value creation comes from the extension of an MNC's experience-based capabilities to the host country to mitigate country-level risks. this experience can moderate the negative influence of environmental risk to create value for a firm and its investors. 0 In our sample of 305 FDIs, we find that Japanese MNCs that had direct or indirect experience in a host country showed greater abnormal returns in a FDi, particularly where environmental risk was high.

Dodging bullets: The heterogeneous effect of political violence on greenfield FDI

“…Since the conception of the institution-based view of international strategy that, combined with the resource-based view and the industry approach, forms the tripod of strategy, several studies have focused on the effect of institutions on international strategy and the interaction with the resource-based view (e.g. Darendelli & Hill, 2016;Goerzen, Sapp & Delios, 2010;Holburn & Zelner, 2010). Yet, this literature largely overlooks the interrelations with the industrybased viewa significant gap given the evidence that the sector in which an MNE operates matters for its location choice decisions in countries with weak institutions (Burger et al, 2016;Driffield et al, 2013;Garcia-Canal & Guillén, 2008;Ramos & Ashby, 2013;Schotter & Beamish, 2013).…”

IJV Partner Trustworthy Behaviour: The Role of Host Country Governance and Partner Selection Criteria

“…Although faced with these greater challenges in host countries that lack quality governance, managers should also recognize that by developing host country specific capabilities, which enable them to manage the idiosyncrasies of their host market (Delios and Henisz, 2003b; Goerzen et al., 2010; Henisz and Delios, 2001; Makino and Delios, 1996), they would enhance the competitiveness of their firm by better capitalizing on the opportunities in hostile environments (Delios and Henisz, 2000; Tseng and Lee, 2010). The findings of this study demonstrated that one such risk mitigating capability for managing the establishment of an IJV with a trustworthy partner is the effective utilization of partner selection criteria.…”

Terrorism as an external threat factor in global value chains

“…For research, this quantifiability—albeit tragic for the victims—adds possibilities to better analyze, understand, and model terrorism in management and to factor it into theory‐building. Looking back on 17 years of post‐9/11 terrorism research in management, we recognize that at the time of 9/11 attacks, not much business‐related data were available, and terrorism was often subsumed under political risk (Alon, Gurumoorthy, Mitchell, & Steen, ; Goerzen, Sapp, & Delios, ; Oetzel, Bettis, & Zenner, ). Inspired by Enderwick () and Laqueur (), Suder () provided a collection of IB analyses with eminent scholars, starting to calculate cost and impact.…”