Abstract
How terrorism affects firms’ investment decisions is gaining increasing attention globally and represents a frontier topic in international business. Although extant research has shown that terrorism can reduce aggregate investment levels, little attention has been paid to the impact of terrorism on firms’ R&D in a global context. Drawing on real options theory, we argue that terrorism will lead firms to reduce their R&D investment because terrorism-induced uncertainty increases the value of the deferral option in R&D. However, strong national institutions, including strong patent rights protection and low expropriation hazards, will mitigate firms’ disincentive to invest in R&D stemming from uncertainty. Further, multinational firms, larger firms, as well as firms with greater cash flow will be less sensitive to uncertainty in their R&D decisions. Our hypotheses are supported by a battery of tests, including the use of a quasi-experiment, based on firm-level panel data from 48 countries.
Résumé
Comment le terrorisme influe sur les décisions d'investissement des entreprises - cette question, suscitant une attention croissante à l'échelle globale, représente un sujet de recherche exploratoire dans le domaine des affaires internationales. Bien que les recherches existantes montrent que le terrorisme peut réduire les niveaux d'investissement globaux, peu d'attention a été accordée à l'impact du terrorisme sur la R&D des entreprises dans un contexte global. Nous appuyant sur la théorie des options réelles, nous argumentons que le terrorisme conduira les entreprises à réduire leurs investissements en R&D parce que l'incertitude causée par le terrorisme augmente la valeur de l'option de report en R&D. Néanmoins, les institutions nationales fortes, notamment une protection solide des droits de brevet et de faibles risques d'expropriation, atténueront la dissuasion des entreprises d’investir en R&D causée par l'incertitude. En outre, les entreprises multinationales, les grandes entreprises, ainsi que les entreprises disposant de plus de liquidités, seront moins sensibles à l'incertitude dans leur décision de R&D. Nos hypothèses sont corroborées par une série de tests, basée sur les données de panel au niveau de l’entreprise de 48 pays, y compris l'utilisation d'une quasi-expérience.
Resumen
La manera en que el terrorismo afecta las decisiones de inversión de las empresas está ganando cada vez la atención en todo el mundo y representa un tema de vanguardia en negocios internacionales. Aunque la investigación existente ha mostrado que el terrorismo puede reducir los niveles agregados de inversión, poca atención se ha prestado al impacto del terrorismo en I+D de las empresas en el contexto global. Basándonos en la teoría de opciones reales, argumentamos que el terrorismo llevará a las empresas a reducir sus inversiones en I+D debido a la incertidumbre inducida por el terrorismo aumenta el valor de la opción de aplazamiento en I+D. Sin embargo, unas instituciones nacionales sólidas, que incluyan una fuerte protección de los derechos de patente y un bajo riesgo de expropiación, mitigarán el desincentivo de las empresas a invertir en I+D derivado de la incertidumbre. Así mismo, las empresas multinacionales, las empresas de mayor tamaño y las empresas con mayor flujo de caja serán menos sensibles a la incertidumbre en su decisión de I+D. Nuestras hipótesis están respaldadas por una batería de pruebas, incluyendo el uso de un cuasi-experimento, basado en datos de panel a nivel de empresa de 48 países.
Resumo
A forma como o terrorismo afeta decisões de investimento de empresas está ganhando cada vez mais atenção globalmente e representa um tópico de fronteira nos negócios internacionais. Embora a pesquisa existente tenha mostrado que o terrorismo pode reduzir níveis de investimento agregado, pouca atenção tem sido dada ao impacto do terrorismo em R&D de empresas em um contexto global. Baseando-se na teoria de opções reais, argumentamos que o terrorismo levará empresas a reduzir seus investimentos em R&D porque a incerteza induzida pelo terrorismo aumenta o valor da opção de postergação em R&D. No entanto, instituições nacionais fortes, incluindo forte proteção a direitos de patente e baixos riscos de expropriação irão mitigar o desincentivo de empresas para investir em R&D decorrente da incerteza. Além disso, empresas multinacionais, empresas maiores, bem como empresas com maior fluxo de caixa, serão menos sensíveis à incerteza em suas decisões de R&D. Nossas hipóteses são apoiadas por uma bateria de testes, incluindo o uso de um quase-experimento, com base em dados em painel de empresas de 48 países.
摘要
恐怖主义如何影响公司的投资决策在全球范围内越来越受到关注, 并代表了国际商务的一个前沿话题。 尽管现有的研究表明恐怖主义可以降低总投资水平, 但恐怖主义对全球情境下企业研发的影响很少被关注。借鉴实物期权理论, 我们认为恐怖主义将导致公司减少其研发投资, 因为恐怖主义引起的不确定性增加了研发延期选择的价值。 然而, 强大的国家制度, 包括强大的专利权保护和低征用风险, 将减轻企业因不确定性而对研发投资的抑制。 此外, 跨国公司、较大公司以及现金流较多的公司对其研发决策的不确定性不太敏感。 我们的假设得到了一系列测试的支持, 包括使用基于 48 个国家的公司级面板数据的准实验的支持。
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ACKNOWLEDGEMENTS
We acknowledge the valuable comments provided by the editorial team as well as participants at the 2020 AOM annual conference where an earlier version of the paper was presented. Daitian Li acknowledges financial support from the National Natural Science Foundation of China (Grant Numbers: 72104045, 71862017).
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Accepted by Arjen van Witteloostuijn, Area Editor, 4 August 2021. This article has been with the authors for one revision.
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Li, D., Tong, T.W., Xiao, Y. et al. Terrorism-induced uncertainty and firm R&D investment: A real options view. J Int Bus Stud 53, 255–267 (2022). https://doi.org/10.1057/s41267-021-00470-x
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DOI: https://doi.org/10.1057/s41267-021-00470-x