Does prior success influence risk-taking in foreign location decisions? A prospect theory perspective

IF 5.7 2区管理学 Q1 BUSINESS Global Strategy Journal Pub Date : 2024-10-01 DOI:10.1002/gsj.1513

Kathrin Schwaiger, Petra Hennrich, Jan Hendrik Fisch

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Abstract

Research Summary

Research suggests that foreign direct investment decisions can be biased and deviate from economic theory. This study deploys prospect theory to analyze the impact of the success of previous investments on risk-taking in subsequent investment decisions. Our theorizing suggests that prior success influences foreign investors' decisions to take host-country risk, and that this moderating influence on the risk-investment relation is specific to the type of risk. The results of an event-history study of 1259 location decisions support the notion that the success of previous investments encourages investors to enter host countries with high negative or positive risk, whereas it discourages them from entering locations with high mixed risk. The effects are stronger for investment locations that are similar than for those that are dissimilar.

Managerial Summary

Regarding the varying risks that investors face in foreign countries, investment decisions may sometimes appear rather confident and sometimes rather cautious. Our study relates these decisions to the success that investors had with similar investments in the past, since research suggests that experiencing gains or losses can influence decision behavior. The results suggest that prior success affects risk-taking in foreign direct investment decisions and comes in contrary forms, depending on the type of risk: prior success leads to overconfident investment decisions in the case of negative and positive risk, whereas it induces overcautious investment decisions in the case of mixed risk. Being aware of these behavioral tendencies can prevent managers from making biased investment decisions.

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先前的成功是否会影响国外选址决策中的风险承担？前景理论视角

研究摘要研究表明，外国直接投资决策可能存在偏差，偏离经济理论。本研究运用前景理论分析了先前投资的成功对后续投资决策中风险承担的影响。我们的理论研究表明，先前的成功经验会影响外国投资者承担东道国风险的决策，而这种对风险投资关系的调节作用是针对风险类型的。对 1259 项投资地点决策进行的事件史研究结果表明，以往投资的成功经验会鼓励投资者进入负面或正面风险较高的东道国，而阻碍他们进入混合风险较高的投资地点。对相似投资地点的影响比对不同投资地点的影响更大。管理总结由于投资者在国外面临的风险各不相同，因此投资决策有时会显得相当自信，有时又会显得相当谨慎。我们的研究将这些决策与投资者过去在类似投资中取得的成功联系起来，因为研究表明，经历过的收益或损失会影响决策行为。研究结果表明，以往的成功经验会影响外商直接投资决策中的风险承担，并根据风险类型以相反的形式出现：以往的成功经验会导致在消极和积极风险情况下做出过于自信的投资决策，而在混合风险情况下则会诱发过于谨慎的投资决策。意识到这些行为倾向可以防止管理者做出有失公允的投资决策。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Global Strategy Journal MANAGEMENT-

CiteScore

14.20

自引率

11.80%

发文量

期刊介绍： The Global Strategy Journal is a premier platform dedicated to publishing highly influential managerially-oriented global strategy research worldwide. Covering themes such as international and global strategy, assembling the global enterprise, and strategic management, GSJ plays a vital role in advancing our understanding of global business dynamics.

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