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Cross-Border Alliances and Risk Management

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Title: Cross-Border Alliances and Risk Management
Author(s): Bodnaruk A; Manconi A; Massa M
Subject(s): Cross-border Alliances and M&As International Growth Governance Partner Risk State Expropriation
Abstract: We study U.S. firms’ foreign expansion choices, and investigate alliances as risk management devices used to mitigate partner risk. Firms venturing abroad are constrained by the availability of potential partners. One set of partners are foreign companies the firm shares the venture with (direct partners). The second set of partners is the institutions/government of the host country (indirect partners). Firms are more likely to choose alliances (over M&As) when indirect (direct) partner risk is high (low). The sensitivity to direct partner risk varies in the cross-section, and is weakened by firm’s financial constraints and/or greater ease of monitoring foreign partners.
Issue Date: 2016-05
Publisher: Elsevier
Citation Info: Bodnaruk, A., Manconi, A. and Massa, M. Cross-border Alliances and Risk Management. Journal of International Economics. 2016. 102: 22-49. doi: 10.1016/j.jinteco.2016.05.002.
Type: Article
Description: This is the author’s version of a work that was accepted for publication in Journal of International Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of International Economics. 2016. 102: 22-49. DOI: 10.1016/j.jinteco.2016.05.002.
URI: http://hdl.handle.net/10027/21427
ISSN: 0022-1996
Date Available in INDIGO: 2017-09-20
 

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