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Dissertation/Thesis Abstract

In an Era of Disruption: Multinationals' Responses to Host Country Political Violence
by Liu, Chang, Ph.D., Indiana University, 2019, 124; 13904314
Abstract (Summary)

In this three-essay dissertation, I study how multinational enterprises (MNEs) respond to host country political violence with a specific focus on terrorist attacks, and how factors influencing top management teams’ (TMTs) cognition and decision-making subsequently impact MNEs’ responses. Essay One examines MNEs’ divestment as a response to host country terrorist attacks. Drawing on construal level theory, I theorize that the social distance of an MNE’s top executives from the event host country influences the effect of host country terrorist attacks on the MNE’s divestment in response to the attacks. I further propose that the moderating effect of MNEs executives’ social distance is contingent upon MNEs’ experience with terrorist attacks.

Essay Two extends Essay One by exploring the temporal horizon of MNEs’ divestment in response to host country terrorist attacks. Specifically, I differentiate temporary divestment from permanent divestment, and propose that the severity of host country terrorist incidents decreases MNEs’ likelihood of temporary as opposed to permanent divestment as well as MNEs’ investment level bounce-back speed. Further, building on CEO value and ideology research, I propose that the impact of terrorism severity on MNEs’ temporary vs. permanent divestment and on MNEs’ investment bounce-back speed is contingent upon MNEs CEOs’ conservatism, such that the negative impact of terrorism severity on MNEs’ likelihood of temporary divestment and on their investment level bounce-back speed is weaker for more conservative CEOs.

Essay Three extends the first two essays by examining different response activities MNEs engage in other than divestment. Specifically, drawing on crisis management literature that emphasizes the importance of risk assessment and risk reduction in crisis responses, I hypothesize that MNEs exert information control over event host country subsidiaries to facilitate their assessment of the incidents’ impact, and engage in within-country geographic diversification to reduce the negative impacts. Further, MNE top management team (TMT) gender diversity moderates the relationship between host country terrorism severity and MNEs’ responses through information control and within-country geographic diversification, because gender diversity increases TMTs’ emphasis on decision-making comprehensiveness.

Empirical results based on a sample of Fortune US 100 companies and their foreign subsidiaries provide support for most of the hypotheses. Taken together, these three essays advance the emerging research stream in international business literature on how MNEs respond to host country political violence, and extend upper echelon research on executive decision-making in extreme settings.

Indexing (document details)
Advisor: Li, Dan
Commitee: Lyles, Marjorie A., Josefy, Matthew, Williams, Trenton A., Eden, Lorraine
School: Indiana University
Department: Business
School Location: United States -- Indiana
Source: DAI-A 81/2(E), Dissertation Abstracts International
Subjects: Management, International Relations
Keywords: Multinational enterprises, Top management teams, Terrorist attacks
Publication Number: 13904314
ISBN: 9781085729802
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