Department of Economics and Business Economics

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

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

  • Tom Aabo
  • Christos Pantzalis, University of South Florida, United States
  • Helle Sørensen, Nykredit Realkredit A/S, Denmark
  • Malene Teilmann Toustrup, Kids Retail of Denmark, Frederiksholms Kanal 4, DK 1220 Copenhagen K, Denmark, Denmark
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
Pages (from-to)1297–1308
Number of pages12
Publication statusPublished - 2016

Bibliographical note

Corporate risk
External sourcing
Foreign suppliers
Real options

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