From uncertainty to risk—A risk management framework for market entry |
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| Institution: | 1. Université de Lorraine and Ecricome Universa, Nancy, France;2. Research Department, Central Bank of Albania, Sheshi “Skënderbej”, nr. 1, Tiranë, Albania;3. ICN Business School, 13 Rue Michel Ney, 54000 Nancy, France;1. Department of Management, Bologna, Italy;2. Department of Industrial and Information Engineering & Economics, University of L’Aquila, Italy;1. Sun Yat-Sen Business School, Sun Yat-Sen University, Guangzhou, Guangdong Province, China;2. Texas Christian University, Fort Worth, TX 76129, USA;3. City University London, London, UK;4. Vienna University of Economics and Business, Vienna, Austria;1. Kansas State University, College of Business Administration, Department of Management, 3091 Business Building, 1301 Lovers Lane, Manhattan, KS 66506, United States;2. University of Memphis, Fogelman College of Business and Economics, Department of Management, 220 Fogelman Executive Center, Memphis, TN 38152, United States;3. University of Arkansas, Sam M. Walton College of Business, Department of Management, 402 Business Building, Fayetteville, AR 72701, United States;1. Goodman School of Business, Brock University, 500 Glenridge Avenue, St. Catharines, ON L2S 3A1, Canada;2. Ivey Business School, Western University, 1151 Richmond Street North, London, Ontario N6A 3K7, Canada;3. Associate Professor of Strategy, Naveen Jindal School of Management, The University of Texas at Dallas, 800 West Campbell Rd, Richardson, TX 75080, United States |
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| Abstract: | This paper contributes to entry mode theories by proposing to integrate the distinction between uncertainty and manageable risk (Knight, 1921). Acknowledging firms’ ability to diversify, transfer and mitigate certain sources of risk provides an additional layer of analysis, improves empirical modelling and managerial practicability of entry mode research. We provide a framework of instruments including capital structure, contractual and network-based risk management. We illustrate the theoretical and empirical value of our framework using a large sample of project financed infrastructure investments. Finally, we position project finance as a risk-motivated, cooperative market entry mode complementing existing categorizations. |
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| Keywords: | Risk management Entry mode Internationalization Multinational enterprises International project finance |
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