Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5110165 | Journal of International Management | 2016 | 16 Pages |
Abstract
Studies of how firms respond to host country risk have assigned explanatory primacy to organizational capability and managerial risk preference. The organization-level account is built on the premise that capability is a prerequisite for risk-taking while the individual-level account focuses on the managers' intrinsic behavioral attitude. Without integrating one with the other, the former is open to many alternative explanations while the latter remains only a source of heterogeneity. We propose that employing the microfoundations approach can address the limitations of each account and yield a fuller understanding of FDI risk-taking. Drawing upon behavioral decision theory and the concept of risk propensity, we describe the lower-level mechanisms that generate the empirical regularity between firm experience and risk-taking, which has been attributed to the macro-level capabilities paradigm. We finalize the framework with an account as to how individual-level mechanisms can be incorporated into the context of organizational strategic decision-making.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Peter J. Buckley, Liang Chen, L. Jeremy Clegg, Hinrich Voss,