Learning to Carry the Cat by the Tail: Firm Experience, Disasters, and Multinational Subsidiary Entry and Expansion
Jennifer M. Oetzel, Chang Hoon Oh
Organization Science · 2014 · Volume 25 · Issue 3
Abstract
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.
Keywords
disasters, discontinuous risk, firm experience, foreign entry and expansion, terrorism
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