Abstract

This study examines the antecedents and strategic consequences of perceive risk when multinational corporations (MNCs) investing abroad. The study examine the complex relationships among risk’s antecedent variables about host country factors and network perspective with a sample of 1,020 manufacturers, the study find that: MNCs perceive lower levels of risk when market potential is greater, infrastructure is better established, or lower level of corruption. Regardless of how MNCs engage in foreign direct investment—whether they actively following the customers or are requested by customers to follow— they perceive higher levels of risk in a host country. With regard to the strategic consequences of risk perceptions, when MNCs perceive higher host country risks, they enhance their level of subsidiary ownership, avoid granting access to local partners and associates, and reduce subsidiaries’ autonomy. This study provide practitioners a guide for evaluating the risks associated with investing in foreign markets, furthermore the study also proposes MNCs some strategic alternatives in the face of higher investing risk.

Key words: Perceived risk, network perspective, host country factors, strategic consequences.