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

Dorottya Sallai, Gerhard Schnyder, Daniel Kinderman and Andreas Nölke

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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: business–government relations; MNE–host-country relations; multinational corporations (MNCs) and enterprises (MNEs); political risk; populism; 462-19-080 (search for similar items in EconPapers)
JEL-codes: J50 (search for similar items in EconPapers)
Date: 2023-04-05
New Economics Papers: this item is included in nep-int, nep-pol and nep-rmg
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Published in Journal of International Business Policy, 5, April, 2023. ISSN: 2522-0691

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