The field of international business (IB) is in need of more theory development. As such, the main focus of our manuscript was to provide guidance on how to build IB specific theory using grounded theory (GT). Moreover, we contribute to future theory development by identifying areas within IB where GT can be applied and the type of research issues that can be addressed using this methodology. Finally, we make a noteworthy contribution by discussing some of GT’s caveats and limitations, particularly those relevant to IB. This effort is intended to spur further interest in the development of IB theory.

Abstract Research summary The authors investigated investor reactions to the appointment of Black executives. The results indicate that investors respond: (1) more negatively to the announcement of Black CEO appointments than to White CEO appointments, (2) more negatively to the announcement of the Black top management team (TMT) appointments than to White TMT appointments, (3) more negatively to the announcement of Black CEO appointments than to Black TMT appointments, and (4) more negatively to the announcement of Black CEO appointments who are promoted from outside the firm than to the announcement of Black CEO appointments who are promoted from inside the firm. Moreover, the post‐hoc analysis revealed that investors react more negatively to the TMT appointment of Black executives than to the TMT appointment of Latino or Asian executives. Our results show the negative association between the appointment of Black executives and investors' reactions, and we hope it sparks future research examining causal factors and their potential solutions. Managerial summary Investors react more negatively to the announcement of Black CEO appointments than to White CEO appointments, and more negatively to the announcement of Black CEO appointments who are promoted from outside the firm than to the announcement of Black CEO appointments who are promoted from inside the firm. Moreover, investors react more negatively to TMT appointments of Black executives than to TMT appointments of White, Latino, or Asian executives.