Macroenvironmental dynamism and firm risk management - An exploratory investigation
Klein, Florian Puck, Jonas F. Weiss, Martin
Klein, Florian
Puck, Jonas F.
Weiss, Martin
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Publication Type
Book Chapter
Supervisor
Publication Year
2019
Journal
Book
International Business in a VUCA World: The changing role of states and firms
Publication Volume
Publication Issue
Publication Begin page
173
Publication End page
197
Publication Number of pages
620
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Abstract
The macroenvironment constitutes a widely acknowledged source of firms’risk in international business. A substantial body of research on macroenvironmental risks encapsulates a variety of measurement approaches, antecedents,and managerial consequences. However, a review of established macroenvironmental risk measures reveals that these measures strongly focus on the quality of the macroenvironment, assuming a rather static perspective and mainly excluding dynamic aspects. Building on prior research on macroenvironmental risk as well as on environmental dynamism, we argue that macroenvironmental dynamism – i.e. the frequency, intensity, and predictability of macroenvironmental variation – is a pivotal source of risk in international business, which so far only received limited attention. Moreover, we suggest that macroenvironmental dynamism influences firms’ risk management activities, a measure we use to empirically investigate firm implications of macroenvironmental dynamism. We explore this effect using primary survey data on risk management activities from 158 foreign subsidiaries in six emerging countries and secondary data on the macroeconomic context in these countries. We find evidence that macroenvironmental dynamism, if compared to macroenvironmental quality, exerts a strong influence on firms’ risk management activities. Our findings enhance the understanding of the dynamic nature of macroenvironmental risk in international business as well as provide a concept to more comprehensively measure macroenvironmental dynamism that future research can build upon.
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Keywords
Macroenvironmental Risk, Macroenvironmental Dynamism, Volatility, Risk in International Business, Emerging Markets, Risk Management