Going back into previously exited markets is a significant management risk. But, how are re-entry risks managed? By adding strategic reference point (SRP) rationales to the risk management literature, this chapter examines re-entry after initial entry and divestment on a sample of 654 multinational enterprise (MNE) re-entrants. The authors move away from narrow risk management lenses according to which risks happen in isolation and theorize that MNEs simultaneously manage international risk by exploiting the trade-offs among external and internal sources of risk. The authors explain that, for re-entrants, exit may become the SRP for evaluating future strategic choices. The results suggest that re-entrants tend to manage re-entry risk by choosing partner-based modes that enable them to maintain strategic flexibility at re-entry. Surprisingly perhaps, market-specific experience acquired during the initial market foray does not provide strategic flexibility, in that highly experienced firms still experience risk trade-offs.
|Title of host publication||The Multiple Dimensions of Institutional Complexity in International Business Research|
|Editors||Alain Verbeke, Rob van Tulder, Elizabeth L. Rose, Yingqi Wei|
|Place of Publication||Somerville, MA|
|Publisher||Emerald Group Publishing Limited|
|Pages||239 - 262|
|Publication status||Published - 2021|