The antecedents of MNC political risk and uncertainty under right-wing populist governments

Dorottya Sallai (), Gerhard Schnyder (), Daniel Kinderman () and Andreas Nölke ()
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Dorottya Sallai: London School of Economics—LSE
Gerhard Schnyder: Loughborough University London
Daniel Kinderman: University of Delaware
Andreas Nölke: Goethe University Frankfurt

Journal of International Business Policy, 2024, vol. 7, issue 1, No 4, 63 pages

Abstract: Abstract Right-wing populist parties who obtain governmental power rely on ethno-nationalist mobilization for domestic legitimacy. They may therefore adopt policies that explicitly seek to disadvantage foreign multinational corporations (MNCs). Understanding what factors increase a foreign MNC’s exposure to adverse action by right-wing populists is an understudied question in the field of international business policy. We investigate this question in post-socialist member states of the European Union, which constitute extreme cases of right-wing populist government power. As such, they constitute a fertile ground to further our theoretical understanding of the distinction between calculable political risk and incalculable political uncertainty. Through a case study-based theory-building approach, which draws on existing literature and interview data, we derive a series of propositions and develop a research agenda. We identify factors at the country-, sector-, and firm-level that influence exposure to adverse policy action by host-country governments. We explore when political risk may turn into political uncertainty and provide suggestions to foreign MNCs operating in right-wing populist contexts on how to reduce this uncertainty. Our study provides insights for policy makers too, who should be aware of the impact political shifts towards right-wing populist governments have on political uncertainty for foreign companies.

Keywords: populism; MNE–host-country relations; multinational corporations (MNCs) and enterprises (MNEs); political risk; business–government relations (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s42214-023-00154-3

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