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Distance and perceptions of risk in internationalization decisions

Author

Listed:
  • Sascha Kraus

    (Liechtenstein University = Universität Liechtenstein)

  • Tina Ambos

    (University of Sussex)

  • Felix Eggers

    (University of Groningen [Groningen])

  • Beate Cesinger

    (NDU - New Design University, MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier)

Abstract

This study examines top managers' risk perceptions in internationalization decisions. 126 CEOs and top managers responsible for internationalization in companies with headquarters in Germany, Switzerland, or Austria took part in our experiment. Applying random utility theory in a conjoint choice experiment enables the measurement of top managers' preferences for target countries and entry modes. Country-specific measures of geographic, cultural, economic, and political distances serve as covariates to explain country preferences and to quantify the effect on internationalization decisions. Our results show that distance dimensions are the primary drivers of risk assessment, whereas entry-mode choice is secondary. Internationalization may therefore be a hierarchical decision in which managers choose target market (and risk profile) and view entry-mode choice as subordinate to other environmental factors.

Suggested Citation

  • Sascha Kraus & Tina Ambos & Felix Eggers & Beate Cesinger, 2015. "Distance and perceptions of risk in internationalization decisions," Post-Print hal-02011127, HAL.
    • Handle: RePEc:hal:journl:hal-02011127
    DOI: 10.1016/j.jbusres.2015.01.041
    as

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