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

• Published in: Journal of International Business Policy 2023-04
• Main Authors: Sallai, Dorottya, Schnyder, Gerhard, Kinderman, Daniel, Nölke, Andreas
• Format: Article
• Language: English
• ISSN: 2522-0691; 2522-0705
• DOI: 10.1057/s42214-023-00154-3

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. Les partis populistes de droite qui obtiennent le pouvoir gouvernemental s'appuient sur une mobilisation ethno-nationaliste pour consolider leur légitimité nationale. Ils vont donc adopter des politiques qui cherchent explicitement à désavantager les multinationales étrangères. Dans le domaine des politiques d’affaires internationales, les facteurs qui augmentent l'exposition d'une multinationale étrangère aux actions défavorables des populistes de droite est sont peu analysés. Nous étudions cette question dans les États post-socialistes membres de l'Union européenne, qui constituent des cas extrêmes de gouvernements populistes de droite. Ils constituent donc un terrain pertinent pour approfondir notre compréhension théorique de la distinction entre le risque politique (calculable) et l'incertitude politique (incalculable). Grâce à une approche de construction théorique basée sur des études de cas, qui s'appuie sur la littérature existante et des données d'entretiens, nous déduisons une série de propositions et développons un programme de recherc