Publication Date

7-16-2021

Document Type

Article

Department

Global Innovation and Leadership

Disciplines

Infrastructure | International Business | Terrorism Studies

Publication Title

Journal of Business Research

Abstract

This paper analyzes the impact of terrorism hazard on the performance of private participation infrastructure projects. Applying transaction cost theory, we hypothesize that terrorism hazard has a negative relationship with infrastructure project completion, and that host government accountability and investor experience with terrorism hazard have opposing impacts on this relationship. Host government accountability, we argue, produces higher indirect costs of managing terrorism hazard, which reduces investor confidence, and reinforces the negative relationship between terrorism hazard and the probability of satisfactory project completion. Conversely, investor’s experience with terrorism hazard increases investor confidence and hence partially mitigates the negative consequences of terrorism hazard which hamper project completion. Hence, the impact of terrorism is weakened for projects led by firms from higher terrorism hazard countries. We find support for our hypotheses using a sample of 5,083 projects in 135 countries from 2002 to 2017.

Keywords

Terrorism hazard, Infrastructure projects, Major disasters, Voice and accountability, Uncertainty

Comments

This is the Version of Record and can also be read online here.

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.

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