Distance and Perceptions of Risk in Internationalization Decisions

Sascha Kraus*, Tina Ambos, Felix Eggers, Beate Cesinger

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

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.
Original languageEnglish
JournalJournal of Business Research
Volume68
Issue number7
Pages (from-to)1501-1505
Number of pages5
ISSN0148-2963
DOIs
Publication statusPublished - Jul 2015
Externally publishedYes

Keywords

  • Internationalization
  • Risk
  • Choice experiment
  • Conjoint analysis
  • Distances

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