Safety risk and international investment decisions |
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| Institution: | 1. University of Dayton, 300 College Park, Dayton, OH, 45469, USA;2. College of Business, Florida State University, 821 Academic Way, Tallahassee, FL, 32306, USA;1. Department of Organizational Behavior and Theory, Tepper Business School, Carnegie Mellon University, Pittsburgh, PA, USA;2. Department of Industrial Engineering and Management, Technion – Israel Institute of Technology, Haifa, 32000 Israel;1. Social Sciences, Gran Sasso Science Institute, Viale Francesco Crispi 7, 67100, L’Aquila, Italy;2. Department of Management and Technology, Bocconi University, ICRIOS and CEP/SERC, Via Roberto Sarfatti 25, 20100, Milano, Italy;1. Department of Strategy and Innovation, Copenhagen Business School, Kilevej 14, DK-2000, Frederiksberg, Denmark;1. Department of Strategy, Management & Marketing, Birmingham City Business School, Birmingham City University, Birmingham, B4 7BD, United Kingdom;2. Centre For International Business, Leeds University Business School, University of Leeds, Leeds, LS2 9JT, United Kingdom |
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| Abstract: | We identify and demonstrate the merit of a novel institutional factor, safety risk, which likely affects multinational corporations’ (MNCs’) international investment decisions. Safety risk refers to the extent to which security and physical well-being are endangered due to normalized aggression and criminality in society. Despite concerns from executives and policymakers, safety risk has attracted little research attention. We validate a safety risk measure and evaluate the construct’s effect on MNCs’ investments. The findings indicate that countries’ safety risk deters MNCs from investing. Further, in post hoc analyses, firms’ prior experiences with safety risk and countries’ private security investments moderated this relationship. |
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| Keywords: | Safety risk Institutions Foreign direct investment Multinational corporations International investments Country risk |
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