Distance and perceptions of risk in internationalization decisions

Sascha Kraus, Tina Ambos, Felix Eggers and Beate Cesinger
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Sascha Kraus: Liechtenstein University = Universität Liechtenstein
Tina Ambos: University of Sussex
Felix Eggers: University of Groningen [Groningen]
Beate Cesinger: NDU - New Design University, MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier

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Abstract: This study examines top managers' risk perceptions in internationalization decisions. 126 CEOs and top managers responsible for internationalization in companies with headquarters in Germany, Switzerland, or Austria took part in our experiment. Applying random utility theory in a conjoint choice experiment enables the measurement of top managers' preferences for target countries and entry modes. Country-specific measures of geographic, cultural, economic, and political distances serve as covariates to explain country preferences and to quantify the effect on internationalization decisions. Our results show that distance dimensions are the primary drivers of risk assessment, whereas entry-mode choice is secondary. Internationalization may therefore be a hierarchical decision in which managers choose target market (and risk profile) and view entry-mode choice as subordinate to other environmental factors.

Keywords: Internationalization; Risk; Choice experiment; Conjoint analysis; Distances (search for similar items in EconPapers)
Date: 2015-07
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Citations: View citations in EconPapers (40)

Published in Journal of Business Research, 2015, 68 (7), pp.1501-1505. ⟨10.1016/j.jbusres.2015.01.041⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02011127

DOI: 10.1016/j.jbusres.2015.01.041

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