International projects and political risk management by multinational enterprises : insights from multiple emerging markets
Ali, Tahir; Butt, Aurangzeab; Arslan, Ahmad; Tarba, Shlomo Yedidia; Sniazhko, Sniazhana Ana; Kontkanen, Minnie (2021-08-25)
Ali, T., Butt, A., Arslan, A., Tarba, S.Y., Sniazhko, S.A. and Kontkanen, M. (2021), "International projects and political risk management by multinational enterprises: insights from multiple emerging markets", International Marketing Review, Vol. 38 No. 6, pp. 1113-1142. https://doi.org/10.1108/IMR-03-2020-0060
© 2021, Tahir Ali, Aurangzeab Butt, Ahmad Arslan, Shlomo Yedidia Tarba, Sniazhana Ana Sniazhko and Minnie Kontkanen. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
https://creativecommons.org/licenses/by/4.0/
https://urn.fi/URN:NBN:fi-fe2021090144912
Tiivistelmä
Abstract
Purpose: This study investigates an under-researched yet fundamental question of how a developed country multinational enterprises (DMNE) perceives and manages political risks when undertaking infrastructure projects in the emerging markets (EMs).
Design/methodology/approach: The authors use an abduction-based qualitative research approach to analyze six international project operations of a multinational enterprise originating from Finland in five EMs.
Findings: The findings suggest that the overall nature of political risks in EMs is not the same, except few political risk factors that are visible in most EMs. Consequently, the applied risk management mechanisms vary between EMs, except with few common mechanisms. The authors develop an integrative analytical framework of political risk management based on the findings.
Originality/value: This paper is one of the first studies to identify political risk factors for western MNEs while undertaking international project operations and link them to reduction mechanisms used by them. The authors go beyond the notion of risk being conceptualized at a general level and evaluate 20 specific political risk factors referred to in extant literature. The authors further link these political risk factors with both social exchange and transaction cost theories conceptually as well as empirically. Finally, the authors develop a relatively comprehensive analytical framework of political risk management based on the case projects’ findings that combine several strands of literature, including the social exchange theory, transaction cost theory, international market entry, project management and finance literature streams.
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