When Are Emerging Market Multinationals More Risk-taking?

It is recognized that many emerging market multinationals (EM MNEs) are risk-taking or radical when undertaking outbound FDI. Risk-taking, however, is profoundly endogenous and therefore it is misleading to assume that all EM MNEs have high risk-taking propensity nor is an ambitious EM MNE necessarily radical in all its IB activities. This study thus examines endogenous conditions under which EM MNEs tend to be more risk-taking in entering and competing overseas. We seek to understand which firm-specific forces importantly affect these firms risk-taking orientation, risk-taking entry modes, and risk-taking geographic dispersion. Our analysis, based on 228 EM MNEs from China, shows that firms with a greater extent of strategic asset-seeking intent, state ownership, and inward internationalization present significantly higher risk-taking orientation, risky modes such as acquisitions or greenfield FDI, and rapid and aggressive geographic dispersion. Moreover, a firm's financial munificence plays an important role in further increasing the main influence of these endogenous conditions. We discuss the potential implications of our propositions and findings to renew scholarly interests in IB risk management in general and our continuous understanding of EM MNEs behaviors and strategies in particular. [ABSTRACT FROM AUTHOR]