Shocks, Risk Recalibration, and Entrepreneurial Entry (2026).
Entrepreneurship research has long treated risk preferences as a central determinant of business creation, yet it remains unclear whether risk preferences operate primarily as stable traits that sort individuals into entrepreneurship or as behavioral dispositions that change after disruptive events. This paper examines that distinction using a nationally representative longitudinal survey from Mexico that follows individuals across waves, elicits risk preferences through structured choice tasks, and records subsequent business creation. I link these data to local natural disasters to study whether external shocks alter risk-taking behavior and whether such changes predict entrepreneurial entry. The empirical design separates baseline differences in risk aversion from within-person changes in risk preferences after local disruption. Preliminary evidence shows that less risk-averse individuals are more likely to create businesses, consistent with standard selection-based accounts of entrepreneurship. However, the results also indicate that natural disasters have persistent effects on risk preferences, suggesting that shocks can reshape the behavioral foundations of entrepreneurial entry rather than merely revealing preexisting entrepreneurial types. The study contributes to entrepreneurship research by providing a dynamic account of how shocks alter who becomes willing to bear the uncertainty of business creation.
The Geography of Physical Climate Risk: Real-Asset Diversification and Firm Resilience. (2026).
How does the geographic structure of a firm’s operations shape its resilience to physical climate risk? I study this question using a global panel of large multinational firms and their subsidiary locations, matched to geocoded natural disasters. The empirical design treats the firm’s operating footprint as a portfolio of real assets whose exposure to climate shocks depends on the concentration, dispersion, and spatial correlation of subsidiary locations. This approach distinguishes two opposing mechanisms. Geographic diversification may insure firms against localized disasters by spreading operations across less correlated risk environments. Geographic concentration may instead improve resilience when colocated subsidiaries facilitate coordination, information transfer, resource redeployment, and recovery after shocks. I examine whether firms with more diversified footprints experience smaller declines in performance following climate shocks and whether capital markets assign value to the resilience embedded in their spatial portfolios. The study contributes to research on climate adaptation by showing that physical climate risk is shaped by corporate location strategy, rather than solely by exogenous hazard exposure. It also contributes to the literature on global strategy by identifying geographic footprint design as a channel through which firms manage systemic operational risk. More broadly, the paper links climate risk, real-asset allocation, and organizational resilience, showing how the spatial organization of multinational activity affects firm value in an era of increasing disaster risk.
Corporate Risk-Taking and Exposure to Climate Change: A Geospatial Analysis of Multinational Enterprises (2025).
This paper studies whether firm-level exposure to physical climate risk is partly an outcome of corporate risk-taking. Climate finance research increasingly measures firms’ exposure to climate risk, yet most measures implicitly treat exposure as external to the firm. I argue that this assumption is incomplete. Firms differ in their willingness to bear operational, geographic, and financial risk, and these differences may shape where they expand, acquire assets, and maintain production. As a result, observed climate exposure may reflect selection by firms with more aggressive risk profiles rather than exogenous exposure alone. I test this argument by constructing an operation-weighted measure of physical climate exposure for the international activities of the world’s 2,000 largest corporations. The measure combines firms’ global operating locations with local exposure to climate-related hazards and separates two margins: selection into climate-exposed regions before shocks occur and changes in corporate risk-taking after climate shocks are realized. This design reframes corporate climate exposure as an endogenous firm outcome shaped by physical hazards, location strategy, and managerial risk preferences. The paper contributes to streams of work on the strategic implications of climate adaptation by identifying a source of climate-risk heterogeneity that is typically absorbed into exposure measures.
Luis Ballesteros 