How does de‐globalization affect location decisions? A study of managerial perceptions of risk and return

Tina C. Ambos · Beate Cesinger · Felix Eggers · Sascha Kraus

67 citations0/0 files storedGlobal Strategy Journal

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International Business and FDI International Student and Expatriate Challenges Outsourcing and Supply Chain Management

Abstract

Research Summary Our understanding of how managers take international location decisions is still scarce. Building on the microfoundations view, we explore managers' perceptions of risk and return in a discrete choice experiment with 2,618 decisions in 2013 (a globalizing world) and 2017 (a de‐globalizing world). While managerial perceptions vary over time due to economic and political changes, such as the current de‐globalization trend, decision heuristics remain remarkably stable: locations perceived as least risky offer the highest expected returns. We also find that distance is a good proxy for managerial perceptions. Investigating the microfoundations of decision‐making we show that international experience, risk‐taking propensity, and shareholder status affect heuristics. In sum, our study provides novel insights into the microfoundations of location decisions and extends the behavioral perspective on internationalization. Managerial Summary While many researchers in the field of international business and global strategy have studied internationalization, surprisingly few of them put the actual decision maker in the spotlight. This study investigates the decision heuristics of managers who are confronted with international location decisions. We show that their perceptions of risk and return in the context of a globalizing world (in 2013) and in the context of a de‐globalizing world (in 2017) vary. However, the underlying heuristic—locations that are perceived as least risky offer the highest expected returns—remains stable. Our study also indicates that distance is a good proxy for managerial decisions and that managers' international experience, risk‐taking propensity, and shareholder status affect their decision‐making patterns.

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References

1979Prospect Theory: An Analysis of Decision under Risk 1981The Framing of Decisions and the Psychology of Choice 1977The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments 1988The Effect of National Culture on the Choice of Entry Mode 1976The Future of the Multinational Enterprise 2010Heuristic Decision Making 2004Risk as Analysis and Risk as Feelings: Some Thoughts about Affect, Reason, Risk, and Rationality 2000Stated Choice Methods

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