In Chapter 4, we shift the focus of our analytical framework to the effect of natural disasters on subsidiary-level foreign direct investments by multinational corporations (MNCs). in this chapter we conceptually examine how natural disasters, compared to industrial disasters and terrorist attacks, shape MNCs foreign market entry and expansion. We also investigate whether MNC subsidiary-level investment is more likely to decrease in response to specific types of natural disasters that result in a higher number of fatalities. In addition, we also elaborate on how country institutional governance characteristics (i.e., regulatory quality, rule of law, democratic freedoms, political stability, and corruption levels) moderate the relationship between disasters and MNC subsidiary-level investment.

In Chapter 8, we empirically examine the research questions conceptually discussed in Chapter 5: Are MNCs able to gain experiential advantages from managing during natural disasters that enable them to enter and expand into other countries experiencing similar risks? And how do MNCs’ experiences with natural disasters compare to those associated with terrorist attacks and technological disasters? We used a panel dataset with 57,500 observations from 106 European Global Fortune 500 MNCs and their subsidiaries operating across 109 countries during a seven-year period, 2001-2007. We find that experience with high-impact natural disasters (as well as terrorist attacks, and technological disasters) can be leveraged for expansions into an existing host country but not for initial entry into other countries experiencing similar high-impact disasters. We also find that experience with low-impact natural disasters does not appear to reduce the negative effect of disaster severity on expansion (or entry). A notable exception, experience with high impact floods does show a positive and significant moderating effect on the negative link between disaster severity and MNC entry. N14:N15

In Chapter 7, we empirically test the propositions and hypotheses developed in Ch. 4. Specifically, we examine whether natural disasters, compared to other industrial disasters and terrorist attacks, affect multinational corporations (MNCs) foreign subsidiary investment. We also analyze if this effect varies in response to different sub-types of natural disasters. Then, we test if stronger institutional environments moderate the relationship between disasters and foreign subsidiary-level investment. We test our hypotheses using a panel dataset that includes 31,285 observations from 71 European Fortune Global 500 MNCs and their subsidiaries operating across 101 countries during the period 2001–2006. Our findings indicate that MNC foreign subsidiary investment is likely to decrease in response to severe terrorist attacks or technological disasters but not natural disasters, except for the case of windstorms and related water surges, the deadliest weather-related natural disasters. For natural disasters, the likelihood of MNC subsidiary-level disinvestment increased with higher host country democratic freedoms and decreased with higher host country’s regulatory enforcement quality.