Risk mitigation strategies in international B2B relationships: Role of institutions and governance

Abstract The ubiquitous presence of B2B relationships in the international business context makes it imperative for scholars to understand the risks involved in these relationships. Yet, we have an inadequate understanding of the nature and extent of risks that MNCs face in international B2B relationships. We present a comprehensive model of risks that MNCs face in different types of B2B relationships. We then discuss the strategic choices that MNCs pursue to manage these risks. Specifically, we argue that the national differences affect the nature and extent of risks that MNCs face in their B2B relationships. We then focus on equity-based B2B relationships and argue that the governance structure that MNCs choose helps alleviate both the ex-ante and ex-post risks in a B2B relationship. We also discuss the contingencies – national differences, intangible assets of the MNC, and host country- and partnership-specific experience of the MNC – that impact MNCs’ risk management strategies.