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Learning to Carry the Cat by the Tail: Firm Experience, Disasters, and Multinational Subsidiary Entry and Expansion

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  • Jennifer M. Oetzel

    (Kogod School of Business, American University, Washington, DC 20016)

  • Chang Hoon Oh

    (Beedie School of Business, Simon Fraser University, Vancouver, British Columbia V6C 1W6, Canada)

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.

Suggested Citation

  • Jennifer M. Oetzel & Chang Hoon Oh, 2014. "Learning to Carry the Cat by the Tail: Firm Experience, Disasters, and Multinational Subsidiary Entry and Expansion," Organization Science, INFORMS, vol. 25(3), pages 732-756, June.
    • Handle: RePEc:inm:ororsc:v:25:y:2014:i:3:p:732-756
    DOI: 10.1287/orsc.2013.0860
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