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The impact of host-country political risk on multinationals' political strategy development

The impact of host-country political risk on multinationals' political strategy development

Sallai, Dorottya and Schnyder, Gerhard (2019) The impact of host-country political risk on multinationals' political strategy development. In: 46th Academy of International Business UK & Ireland Chapter Conference, 25-27 April 2019, University of Sussex, Brighton. (Unpublished)

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Abstract

The paper investigates how high levels of political risk in a host market’s institutional context influences MNE subsidiaries’ corporate political activity (CPA) strategy. Existing studies have found that subsidiaries facing high-risk contexts prefer a non-engaged approach to CPA, by exercising ‘no exit’ and ‘no voice’ strategies. Based on interviews with business leaders in post-socialist Hungary – a context characterised by high political risk – we present contradictory evidence. We find that subsidiaries – do not limit their strategic responses to non-engagement but use a variety of different engaged and non-engaged strategies to maintain their position in the high-risk host market, but these strategies differ from the traditional ‘voice’ strategies used in low-risk contexts. The paper identifies five different strategic choices: 1. Active responsiveness, 2. Passive responsiveness, 3. A non-responsive strategy of ‘dormancy’, 4. Restructuring to avoid being ‘bought up’ or pushed out of the market and 5. Exit, when firms leave the country. We theorise about the determinants of non-market strategic choices in high-risk environments and suggest that existing theories need to be expanded by applying an institutional legitimacy perspective to political risk.

Item Type: Conference or Conference Paper (Paper)
Uncontrolled Keywords: Business-government relationships; Political strategies; Non-market strategies; Political risk, corporate political activities (CPA)
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Centre for Governance, Risk & Accountability (CGRA)
Related URLs:
Last Modified: 13 May 2019 11:25
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: GREAT 3
URI: http://gala.gre.ac.uk/id/eprint/23648

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