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When are emerging market multinationals more risk taking?
Author(s) -
Luo Yadong,
Bu Juan
Publication year - 2018
Publication title -
global strategy journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.814
H-Index - 24
eISSN - 2042-5805
pISSN - 2042-5791
DOI - 10.1002/gsj.1310
Subject(s) - internationalization , business , international business , emerging markets , foreign direct investment , asset (computer security) , industrial organization , globalization , subsidiary , marketing , multinational corporation , market economy , economics , international trade , finance , computer security , management , computer science , macroeconomics
Research Summary: This study examines the endogenous conditions under which emerging market multinationals (EMNEs) are more risk taking in entering and competing abroad. We argue that strategic asset‐seeking intent, financial abundance, and inward internationalization enable EMNEs to better manage uncertainty and capture benefits, resulting in greater levels of risk‐taking behaviors in foreign entry mode and global dispersion. We offer a process framework showing that the effects of endogenous forces on risk‐taking behaviors take place via a partial mediating role of risk‐taking propensity (entrepreneurial attitude toward risk). Our analysis of Chinese MNEs provides strong evidence validating these arguments. We discuss implications of our findings, intending to invigorate scholarly interests in risk management in a new era of globalization and stimulate understanding of EMNEs' strategic behaviors. Managerial Summary: Many EMNEs are risk taking and radical in undertaking outbound foreign direct investment (OFDI). Yet, it is misleading to assume that all EMNEs have high risk‐taking propensity or that all risk‐taking EMNEs are necessarily equally radical in all their international business (IB) activities. We seek to understand which firm‐specific forces importantly affect these firms' risk‐taking behaviors. Our analyses based upon Chines MNEs reveal that firms with greater levels of strategic asset‐seeking intent, financial abundance, and inward internationalization present significantly higher risk‐taking propensity and risk‐taking acts, including risky entry modes such as acquisitions and aggressive geographic dispersion.