Old Risks, New Reference Points? An Organizational Learning Perspective into the Foreign Market Exit and Re-entry Behavior of Firms

Irina Surdu, Edith Ipsmiller

Publication: Chapter in book/Conference proceedingChapter in edited volume


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.
Original languageEnglish
Title of host publicationThe Multiple Dimensions of Institutional Complexity in International Business Research
Editors Alain Verbeke, Rob van Tulder, Elizabeth L. Rose, Yingqi Wei
Place of PublicationSomerville, MA
PublisherEmerald Group Publishing Limited
Pages239 - 262
ISBN (Print)978-1-80043-245-1
Publication statusPublished - 2021

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