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

Author

Listed:
  • Dorottya Sallai

    (London School of Economics—LSE)

  • Gerhard Schnyder

    (Loughborough University London)

  • Daniel Kinderman

    (University of Delaware)

  • Andreas Nölke

    (Goethe University Frankfurt)

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.

Suggested Citation

  • Dorottya Sallai & Gerhard Schnyder & Daniel Kinderman & Andreas Nölke, 2024. "The antecedents of MNC political risk and uncertainty under right-wing populist governments," Journal of International Business Policy, Palgrave Macmillan, vol. 7(1), pages 41-63, March.
  • Handle: RePEc:pal:joibpo:v:7:y:2024:i:1:d:10.1057_s42214-023-00154-3
    DOI: 10.1057/s42214-023-00154-3
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