Global and Diplomatic Political Risks and Foreign Direct Investment

Desbordes, Rodolphe

doi:10.1111/j.1468-0343.2009.00353.x

Cited by 42 publications

(25 citation statements)

References 81 publications

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“…In the same way, as institutional ties often compensate for an unstable investment climate (Holburn & Vanden Bergh, ; P. Sun, Mellahi, & Thun, ), friendly diplomatic relations can provide additional support for MNEs investing in countries with weak or absent institutions (Zhang, Jiang, & Zhou, ). Along the similar lines, the scholarly literature in other disciplines such as political science argued that friendly bilateral relations between countries generally have a positive effect on trade (Bandelj, ; Desbordes, ), while bilateral ties reduce the possibility of military conflict (Q. Li & Vashchilko, ).…”

Section: Bargaining Framework and The Role Of Home Government Supportmentioning

confidence: 96%

“…At the same time, there have been increased attention toward Chinese outward foreign direct investment (OFDI) in recent decades (Wei, ), especially in the USA (Globerman & Shapiro, ; He & Lyles, ), Africa (J. Li et al, ; Taylor, ), and Latin America (Bandelj, ; Desbordes, ). However, there is relatively limited research on China's investment activities in Central Asia.…”

Section: Introductionmentioning

confidence: 99%

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The role of home governments in entry bargaining of multinationals: China's investment in Central Asia's natural resource sector

Orazgaliyev

2020

Thunderbird Intl Bus Rev

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Over the last two decades, China's participation in Central Asia's energy sector has increased dramatically. This article explores the case study of China's outward foreign direct investment (OFDI) in Central Asia's natural resource sector through the framework of bargaining model. Although the scholarly literature studied extensively FDI determinants and support of the home government on MNE activities abroad, there is little evidence‐based research on the effect of governmental negotiations on OFDI. The existing research on China's OFDI in natural resource sector highlighted the country's complex approach to energy deals, which was facilitated by investment in infrastructure projects and provision of loans. As this study confirmed, support with loans and investment in the development of export pipeline infrastructure was crucial in securing energy deals for Chinese multinationals (CMNEs). More specifically, this article makes an important contribution toward the understanding of China's investment in developing markets with high levels of political risk such as Central Asian region. The presented evidence suggests that there is a positive correlation between home government support and successful entry of CMNEs to natural resource sectors in emerging markets.

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Section: Bargaining Framework and The Role Of Home Government Supportmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 99%

The role of home governments in entry bargaining of multinationals: China's investment in Central Asia's natural resource sector

Orazgaliyev

2020

Thunderbird Intl Bus Rev

View full text Add to dashboard Cite

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“…Scholars have previously documented the outcomes of such stress conditions. For example, political instability is likely to result in stalled economic growth (Aisen & Veiga, 2013;Alesina, Özler, Roubini & Swagel, 1996), while political risk can also be expected to decrease inward FDI (Busse & Hefeker, 2007;Desbordes, 2010).…”

Section: Cumulative Processmentioning

confidence: 99%

Escape FDI and the dynamics of a cumulative process of institutional misalignment and contestation: Stress, strain and failure

Barnard

Luiz

2018

Journal of World Business

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We argue that escape foreign direct investment (FDI) happens when unknown future "rules of the game" cause concern about the continued productive capacity of the economy. Adapting the stressstrain-fail model of materials failure, we argue that escape FDI is a process with three cumulative phases. Conditions for escape FDI (stress) are created by institutional deterioration and contained contestation. Limited escape FDI (strain) results from periods of societal instability and/or inadequate institutional reforms. Extensive escape FDI (failure) results from pervasive societal instability and/or fundamental changes in institutions. Using a historical approach, we develop these propositions for South Africa, 1956 to 2012.

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“…Lobbying the home government becomes a good asset for a MNC (Hadjikhani, Lee and Ghauri, 2008). The home country can influence the business environment faced by its firms abroad (Luo, 2004;Rizopoulos and Sergakis, 2010;Desbordes, 2010). Good relationships between the home and the host country can reduce the exposure of MNCs to political risks and offer them a competitive advantage over their international competitors (Desbordes, 2010).…”

Section: Lobbying and Advocacy In Mncs' Home Countrymentioning

confidence: 99%

How Multinational Corporations Use Lobbying and Advocacy to Mitigate Political Risks

Iftinchi

Hurduzeu

2018

OJBE

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In their international activities multinational corporations (MNCs) face various risks. Political risk is one of them. Expropriations, transfer and convertibility restrictions, breach of contracts, acts of terrorism, domestic political violence or other adverse regulatory changes and/or negative government action represent forms of political risks. Incorporating political risk in their risk management strategies becomes a necessity for MNCs in their search for profits and new markets. This article presents how MNCs use lobbying and advocacy as means to engage with governments and politicians in the country of origin (home country), in the country where a MNC has operations (host country) or at international level (by creating ties with international organisations) in order to mitigate political risks. The case of Repsol and its investment in Argentina is used to demonstrate the application of such tools. The article presents two limitations that might determine the success or failure of MNCs’ lobbying and advocacy activities: governments' unpredictable views towards MNCs and reputational risks. The article has also identified a main difficulty in identifying and examining MNCs way of using lobbying and advocacy to engage with government officials and politicians. This difficulty comes from the informal character of such contacts which makes lobbying and advocacy almost impossible to identify.

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Global and Diplomatic Political Risks and Foreign Direct Investment

Cited by 42 publications

References 81 publications

The role of home governments in entry bargaining of multinationals: China's investment in Central Asia's natural resource sector

The role of home governments in entry bargaining of multinationals: China's investment in Central Asia's natural resource sector

Escape FDI and the dynamics of a cumulative process of institutional misalignment and contestation: Stress, strain and failure

How Multinational Corporations Use Lobbying and Advocacy to Mitigate Political Risks

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