Safety risk and international investment decisions

Kaitlyn DeGhetto, Bruce T. Lamont and R. Michael Holmes

Journal of World Business, 2020, vol. 55, issue 6

Abstract: We identify and demonstrate the merit of a novel institutional factor, safety risk, which likely affects multinational corporations’ (MNCs’) international investment decisions. Safety risk refers to the extent to which security and physical well-being are endangered due to normalized aggression and criminality in society. Despite concerns from executives and policymakers, safety risk has attracted little research attention. We validate a safety risk measure and evaluate the construct’s effect on MNCs’ investments. The findings indicate that countries’ safety risk deters MNCs from investing. Further, in post hoc analyses, firms’ prior experiences with safety risk and countries’ private security investments moderated this relationship.

Keywords: Safety risk; Institutions; Foreign direct investment; Multinational corporations; International investments; Country risk (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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DOI: 10.1016/j.jwb.2020.101129

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