Problematizing the internationalization decision: terrorism‐induced risk

Abstract

Purpose – This paper offers a conceptualization of the internationalization decision confronted by a firm in an environment of terrorism-induced risk. Design/methodology/approach – The approach taken is a conceptualization of the internationalization decision framed from theoretical reasoning and informed by the literature. Findings – The model presents the internationalization decision, a product/market/mode (PMM) combination, in the case of a terrorism-free context and in a with-terrorism context. Using indifference curve mapping of risk/return tradeoffs, an opportunities set of possible PMM combinations and the notion of efficiency, it traces the most attractive opportunities set to show that within this set, the frontier of attractive opportunities is constrained in the with-terrorism case. Propositions are framed to guide future research. While conditions of risk can be calculated, it is concluded that remaining uncalculable is the true uncertainty incited by the systemic effects of international terrorism that call for managerial judgment. Originality/value – The literature in this field reports little on the effects of international terrorism on the firm. With heightened awareness of international terrorism, and the changed environment for the firm operating internationally, it is timely that the effects of terrorism on decision-making in firms be investigated. Advancing beyond description to substantive conceptualization of this decision is an essential step for better understanding of this now pervasive phenomenon.