Corporate risk and external sourcing: A study of Scandinavian multinational firms

Tom Aabo, Christos Pantzalis, Helle Sørensen and Malene Teilmann Toustrup

International Business Review, 2016, vol. 25, issue 6, 1297-1308

Abstract: External sourcing from foreign suppliers is an important aspect of the firm’s internationalization. However, data on such sourcing is available from neither databases nor annual reports. Thus, the corporate risk implications of such sourcing have not been studied previously. We obtain the necessary data by surveying Scandinavian non-financial firms. We find that highly international firms reduce corporate risk by externally sourcing from foreign suppliers both compared to sourcing from own production facilities abroad (due to superior flexibility) and compared to domestic sourcing (due to off-setting cash flows). Our results are statistically significant, are economically meaningful, and have important policy implications.

Keywords: Corporate risk; Internationalization; External sourcing; Foreign suppliers; Real options (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.ibusrev.2016.04.002

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