Home country uncertainty and the international-performance relationship: Building an uncertainity management capability

Alvaro Cuervo-Cazurra, Northeastern University
Luciano Ciravegna, King's College London
Mauricio Melgarejo, Butler University
Luis Lopez, INCAE Business School

Version of record can be found through Elsevier.


We analyze the impact of home country uncertainty on the internationalization-performance relationship ofemerging market firms. Building on organizational learning theory and the institutional approach, we argue thatinternationalization has a positive impact on the performance of emerging market firms, and that this relationshipis strengthened for firms based in emerging countries with higher corruption and political risk. Thereason is that by being exposed to high levels of home country uncertainty in the form of political risk andcorruption, firms develop an uncertainty management capability at home that helps them face the challenges ofinternationalization better. We also propose that this uncertainty management capability helps emerging marketfirms perform better outside of their home region. We test our arguments on a sample of 536 firms fromArgentina, Brazil, Chile, and Peru.