IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v174y2024ics0148296324000365.html
   My bibliography  Save this article

The effect of foreign competition on firm risk-taking: Evidence from tariff reduction

Author

Listed:
  • Choi, Yohan
  • Cho, Sam Yul

Abstract

Drawing on threat rigidity theory, this study hypothesizes that foreign competition driven by tariff reduction may negatively impact domestic firms’ risk-taking. Despite the inherent threats posed by intense foreign competition, domestic firms’ responses may vary. Thus, this study also hypothesizes that performance relative to aspiration and strategic conformity may mitigate the negative impact of foreign competition on domestic firms’ risk-taking. To test these hypotheses, this study examines sharp decreases in import tariff rates within U.S. manufacturing industries as a quasi-natural experiment, employing the difference-in-differences approach. The results strongly support the hypotheses, suggesting that while foreign competition indeed reduces domestic firms’ risk-taking, this effect is mitigated by performance relative to aspiration and strategic conformity.

Suggested Citation

  • Choi, Yohan & Cho, Sam Yul, 2024. "The effect of foreign competition on firm risk-taking: Evidence from tariff reduction," Journal of Business Research, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:jbrese:v:174:y:2024:i:c:s0148296324000365
    DOI: 10.1016/j.jbusres.2024.114532
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296324000365
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2024.114532?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:174:y:2024:i:c:s0148296324000365. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.