Multinational enterprises and natural disasters: Challenges and opportunities for IB research

Abstract

The purpose of this paper is to encourage and to extend research on natural disasters and international business (IB). More specifically, we review the characteristics of natural disasters and the unique challenges they pose to the business environment and examine how they differ from other types of disasters/crises often researched in the IB literature. Next, we investigate the applicability and challenges of core IB theories to the study of natural disasters. By extending new internalization theory (NIT) to overcome challenges of bounded rationality and reliability, we identify effective strategies for managing the threat of natural disasters through establishing multi-sector partnerships and alternative supply chains. Integrating research on the characteristics of natural disasters and the insights from NIT, we propose natural disaster management strategies for multinational enterprises (MNEs) based on varying degrees of geographic scope of natural disasters and MNEs. This paper concludes with proposing new research opportunities for IB scholars in disaster preparedness, cross-organizational collaborations, and supply chain management.