While the existing international business (IB) research primarily focuses on the risk behavior of multinational corporations as a whole, this study shifts attention toward subsidiary-level risk behavior. Building on the behavioral theory of the firm (BTOF), it accepts that firm risk stems from performance feedback, as organizations compare their performance with a reference point. Thus, this study proposes a novel reference point for an MNC subsidiary, i.e., a reference point at the country level, suggesting that deviations below or above this target represent a key driver of subsidiary risk behaviors. Furthermore, it examines the moderating effect of subsidiary age, explaining why this effect becomes more pronounced in longstanding subsidiaries compared to younger subsidiaries. An analysis of a large sample of foreign subsidiaries located in the United Kingdom, Germany, Italy, France, and Spain supports the hypotheses. This study enriches the literature on subsidiary risk behavior and extends the behavioral theory of the firm by introducing a novel reference point within the subsidiary context. New promising perspectives for scholars and practitioners are offered and discussed.
