Do differences in intrinsic risk propensity of corporate leaders result in more aggressive firm internationalization?
Our recent work (joint with Edward Zajac of Kellogg and Hamid Boustanifar of EDHEC) that is just published in JIBS, addresses this question.
Focusing on the fundamental leader characteristic identified in the international entrepreneurship literature, i.e., risk propensity, we develop and test an original framework for analysis, which suggests that CEOs with greater risk propensity will tend to steer their firms towards greater degrees of internationalization and towards more risky venues/locations (countries at a greater cultural distance) and vehicles/entry modes (acquisitions versus alliances). We also more precisely assess our underlying assumption of agentic CEOs affecting firms’ internationalization decisions by positing and testing additional moderator relationships, in which we suggest that the effect of CEO risk propensity on the riskiness of firms’ internationalization choices will be (1) amplified when CEOs enjoy greater power, and (2) attenuated for firms with greater internationalization experience.