Stimulating Firm-Specific Investment through Risk Management

11 Pages Posted: 23 Jul 2007

See all articles by Heli C. Wang

Heli C. Wang

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization

Jeffrey J. Reuer

Purdue University - Krannert School of Management

Jay B. Barney

Ohio State University (OSU) - Human Resource Research

Abstract

This article suggests a rationale for firm risk management that has been largely ignored in financial economics literature. It presents an argument for harnessing the influence of a company's stakeholders who, whether as employees, suppliers or customers, make a valuable investment specific to the company. Such investments are crucial for a firm's competitive advantage, yet because they are firm-specific and therefore cannot be transformed or transferred, stakeholders are often concerned about the risks involved in making them. A company's efforts to manage risk can therefore persuade stakeholders to make even greater firm-specific investments, bringing benefits to shareholders and stakeholders alike.

Suggested Citation

Wang, Heli and Reuer, Jeffrey J. and Barney, Jay, Stimulating Firm-Specific Investment through Risk Management. Hong Kong University of Science & Technology Business School Research Paper Series; Long Range Planning, Vol. 36, pp. 49-59, 2003. Available at SSRN: https://ssrn.com/abstract=1002297

Heli Wang (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization ( email )

Clear Water Bay, Kowloon
Hong Kong

Jeffrey J. Reuer

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Jay Barney

Ohio State University (OSU) - Human Resource Research ( email )

700 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-3161 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
152
Abstract Views
908
rank
192,409
PlumX Metrics