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Navigating political risk: A study on exercising ownership competence of Chinese multinationals

Author

Listed:
  • Li, Zhaomin
  • Jia, Chunchun
  • Pang, Yu
  • Zhao, Shuming

Abstract

High-tech enterprises face significant political risks due to rising protectionist sentiment. In this context, ownership competence is critical for enterprises to make decisions and leverage their resources to maximise benefits. Using Huawei's development practices as a case study, this paper examines how multinationals exercise ownership competence in the face of frequent political risks. Results suggest that ownership competence is driven by institutional logic and is acquired by learning from experience. When enterprises use a combination of matching, governance, timing and institutional competence, they can gain economic value. This study also highlights the importance of home country in multinationals' navigation of political risk and explores the impact of institutional competence on ownership competence. Results show that multinationals from developing countries and emerging markets need to be particularly careful when entering countries or regions with different institutional environments from their home countries. The findings of this study help these enterprises exercise their ownership competence in an appropriate manner to manage political risk.

Suggested Citation

  • Li, Zhaomin & Jia, Chunchun & Pang, Yu & Zhao, Shuming, 2025. "Navigating political risk: A study on exercising ownership competence of Chinese multinationals," International Review of Financial Analysis, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:finana:v:98:y:2025:i:c:s1057521924008457
    DOI: 10.1016/j.irfa.2024.103913
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