A stranger in a strange land: Micro political risk and the multinational firm

Ilan Alon, Theodore T. Herbert

Research output: Contribution to journalArticlepeer-review

72 Scopus citations

Abstract

When a firm chooses to enter or continue business in a foreign market, it becomes exposed to associated political risks which should be assessed and managed. Help is available for becoming aware of the level of macro political risk; that is, the political risk across industries or all businesses in entire countries or geographic regions. Yet, surprisingly little guidance exists by which to identify and assess firm-specific political risks, termed micro political risk. Herein, we offer some new perspectives on the nature of micro political risk within a host country, illustrating how it stems from economic, societal, and governmental forces. We have compiled a number of firm-specific variables which can affect the firm's micro political risk profile, and advance an innovative methodology by which executives can address these variables and develop an assessment of their firm's micro political risk. Examples of micro political risk situations are provided, along with discussion of implementing the proposed methodology.

Original languageEnglish
Pages (from-to)127-137
Number of pages11
JournalBusiness Horizons
Volume52
Issue number2
DOIs
StatePublished - Mar 2009
Externally publishedYes

Keywords

  • Environmental analysis
  • Micro political risk
  • Multinational corporation
  • Risk assessment

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