Risk Is Relative: Heterogeneous Responses to Institutional Risks for Foreign Investment

Abstract Are economic actors equally sensitive to institutional conditions? While existing research recognizes that institutions can have varying effects on actors’ interests, the implicit assumption is are homogeneous in how they their environment. We investigate this context of foreign direct investment, arguing from countries with weaker will be less affected by information about host country conditions—both good and bad. test argument using survey data a diverse group managers-in-training at an international business school. find when asked evaluate potential investment location, respondents developing significantly country’s courts than counterparts developed economies. In contrast, we both respond similarly stability policies. The findings suggest sensitivity risks safeguards certain conditions vary systematically across actors, depending home environment which been exposed type institution.