International projects and political risk management by multinational enterprises: insights from multiple emerging markets

Tahir Ali, Aurangzeab Butt, Ahmad Arslan*, Shlomo Yedidia Tarba, Sniazhana Ana Sniazhko, Minnie Kontkanen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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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.

Original languageEnglish
Pages (from-to)1113-1142
Number of pages30
JournalInternational Marketing Review
Volume38
Issue number6
Early online date25 Aug 2021
DOIs
Publication statusPublished - 26 Oct 2021

Bibliographical note

Publisher Copyright:
© 2021, Tahir Ali, Aurangzeab Butt, Ahmad Arslan, Shlomo Yedidia Tarba, Sniazhana Ana Sniazhko and Minnie Kontkanen.

Keywords

  • Emerging markets
  • International projects
  • Market entry
  • Political risk
  • Risk management mechanisms

ASJC Scopus subject areas

  • Business and International Management
  • Marketing

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