Abstract
Going back into previously exited markets is a significant management risk. But, how are re-entry risks managed? Drawing on the risk management literature, our study examines re-entry after initial entry and divestment on a sample of 654 MNE re-entrants. We move away from narrow risk management lenses according to which risks happen in isolation and theorize that MNEs simultaneously manage international risk by exploiting the trade-offs among external and internal sources of risk associated with foreign direct investment choices. We suggest that, for re-entrants, exit may become the strategic reference point for evaluating future strategic choices. Our results suggest that re- entrants tend to manage re-entry risk by choosing partner-based modes that enable them to maintain strategic flexibility at re-entry. Surprisingly perhaps, market-specific experience acquired during the initial market foray does not provide strategic flexibility, in that highly experienced firms still experience trade-offs.
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