Department of Economics and Business Economics

Corporate risk and external sourcing: A study of Scandinavian multinational firms

Publication: Research - peer-reviewJournal article

DOI

  • Tom Aabo
  • Christos Pantzalis
    Christos PantzalisUniversity of South FloridaUnited States
  • Helle Sørensen
    Helle SørensenNykredit Realkredit A/SDenmark
  • Malene Teilmann Toustrup
    Malene Teilmann ToustrupKids Retail of Denmark, Frederiksholms Kanal 4 st.th., DK 1220 Copenhagen K, DenmarkDenmark
External sourcing from foreign suppliers is an important aspect of the
firm’s internationalization. However, data on such sourcing is available from neither databases nor annual reports. Thus, the corporate risk implications of such sourcing have not been studied previously. We obtain the necessary
data by surveying Scandinavian non-financial firms. We find that highly international firms reduce corporate risk by externally sourcing from foreign suppliers both compared to sourcing from own production facilities abroad (due to superior flexibility) and compared to domestic sourcing (due to offsetting
cash flows). Our results are statistically significant, are economically meaningful, and have important policy implications.
Original languageEnglish
JournalInternational Business Review
Volume25
Issue number6
Pages (from-to)1297–1308
Number of pages12
ISSN0969-5931
DOIs
StatePublished - 2016

Bibliographical note

Corporate risk
Internationalization
External sourcing
Foreign suppliers
Real options

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