Learning to Carry the Cat by the Tail: Firm Experience, Disasters, and Multinational Subsidiary Entry and Expansion

We investigate whether firm experience with discontinuous risks, particularly high-impact disasters that are episodic and difficult to anticipate, moderates the relationship between disasters, foreign entry, and expansion decisions. Using a panel data set with 57,500 observations from 106 large Euro...

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Bibliographic Details
Published in:	Organization science (Providence, R.I.) R.I.), 2014-05, Vol.25 (3), p.732-756
Main Authors:	Oetzel, Jennifer M., Oh, Chang Hoon
Format:	Article
Language:	eng
Subjects:	Analysis Business enterprises Business entities Business risk Business risks Competitive advantage Contingency planning Corruption Decision making Disasters discontinuous risk Economic aspects Expansion firm experience foreign entry and expansion Host country Industrial disasters Influence Investment risk Learning Management Market entry Multinational corporations Multinational enterprises Natural disasters Organizational structure Panel data Regulated industries Risk management Strategic management Studies Subsidiaries Subsidiary Subsidiary companies Terrorism United States Western Europe
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Summary:	We investigate whether firm experience with discontinuous risks, particularly high-impact disasters that are episodic and difficult to anticipate, moderates the relationship between disasters, foreign entry, and expansion decisions. Using a panel data set with 57,500 observations from 106 large European multinational corporations and their subsidiaries operating across 109 countries from 2001 to 2007, we find that although discontinuous risk was negatively related to firm entry and expansion, firms that had experience with high-impact disasters were more likely to expand in countries experiencing disasters.
ISSN:	1047-7039 1526-5455