How does experience change firms' foreign investment decisions to non-market events?

Chang Hoon Oh, Jiyoung Shin and Jennifer Oetzel

Journal of International Management, 2021, vol. 27, issue 1

Abstract: We examine how experience with two types of non-market risks (e.g., natural disasters and armed conflicts) changes foreign direct investment (FDI) decisions. Extending research on organizational learning and FDI, we hypothesize that the greater the experience with recent, frequent and high-intensity risk, the more likely that experience can moderate the relationship between non-market risks and firm international expansion. Given a sample of 625 Fortune Global 500 firms and their investments in 117 countries between 1999 and 2008, we find that experience with recent, frequent, and high-intensity risk can change a firm's FDI decision from risk avoidance to risk management.

Keywords: Non-market risk; Natural disasters; Armed conflicts; COVID-19; Foreign direct investment; Experience; Time (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intman:v:27:y:2021:i:1:s1075425320305743

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DOI: 10.1016/j.intman.2020.100802

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