Open for business in a closed world? Managing MNE nonmarket strategy in times of populism and geopolitical uncertainty

Abstract

Purpose This paper aims to consider how multinational enterprises are increasingly augmenting their international strategies with insights on, and approaches to, external stakeholders and nonmarket dynamics. The rise of populism and increased geopolitical uncertainty have accelerated these efforts, particularly for business leaders anticipating and engaging external agents, events, and issues that challenge the strategic objectives of their enterprises. Design/methodology/approach This paper aims to explain why the increased preponderance of populism and geopolitical uncertainty are simultaneously posing an existential threat to the post-Cold War global economy predicated on free trade and (relatively) open borders, and consequently, challenging the structures and strategies of international business. Findings We provide an overview of the four papers in our special issue, and consider how each advances insights on how multinational enterprises effectively navigate the nonmarket uncertainties of the contemporary global economy. We then advance four important areas for international business research around multinational nonmarket strategies: (i) resilience and legitimacy; (ii), diversification; (iii), market and nonmarket strategy integration; and (iv), institutional arbitrage. Research limitations/implications We anticipate that nonmarket strategy scholars can build on these themes to assess how nonmarket strategies can better enable multinational enterprises to survive and thrive in an age of heightened global risk and uncertainty. Originality/value This paper and the related special issue provide new theoretical insights by bringing attention to the relatively under-researched realm of multinational enterprise nonmarket strategy, particularly in populist contexts and during periods of geopolitical uncertainty. We identify four promising domains – resilience and legitimacy, diversification, the integration of market and nonmarket strategy, and institutional arbitrage – for international business scholars investigating nonmarket strategy to consider. We hope that our paper, as well as other papers in this special issue, provide further momentum to this growing area of research.

Industry globalization: construct, measurement and variation across industries

“…Despite the pandemic abating, the year 2022 however witnessed a significantly heightened risk perception which will alter the strategic and operational planning of multinationals well into the future years of the decade. MNEs are already reconfiguring their international supply chains by increasing inventories somewhat and reducing the geographic, cultural and political distance between material and component sources and assembly operations, to make their global operations more “resilient” (White et al , 2021). At least some governments, with greater risk aversion, are also becoming more critical of their dependence on multinational investment.…”

Inter-state war, institutions and multinationals: insights from the Russian-Ukraine war

“…Inter-state wars present a significant problem for MNEs as wars, especially when they involve major economic and political powers, typically shock the highly interdependent national and supranational economic and political system (Casson and da Silva Lopes, 2013; Jamali and Mirshak, 2010; Darendeli et al , 2021; Witte et al , 2020; Lubinski and Wadhwani, 2020; White et al , 2021). MNEs have historically developed strategies to operate in such volatile settings (Delios and Henisz, 2003; Getz and Oetzel, 2009; Casson and da Silva Lopes, 2013; Darendeli et al , 2021; Jamali and Mirshak, 2010; White et al , 2021), and so we witnessed considerable corporate action, inaction and sometimes reversed decisions in response to the Russian–Ukrainian war. For example, British Petroleum (BP) exited from its $14bn stake in Russian oil giant Rosneft, while Uniqlo remained in the market to date (Financial Times, 2022e, 2022f, 2022h).…”

“…Institutional environments significantly shape MNE strategy and behaviour (Kostova et al , 2008; Doh et al , 2012). In addition to deaths and material damage wars extol on societies and industries, wars cause enormous disruption to MNEs’ institutional environments (Bellows and Miguel, 2006; Witte et al , 2020; White et al , 2021). They lead to new regulation either as an instrument of war or to curtail the impacts of war for society (Casson and da Silva Lopes, 2013; Thoradeniya et al , 2022).…”

“…They also lead to non-government actors imposing new expectations on business actors (Casson and da Silva Lopes, 2013). MNEs must respond accordingly to reduce risks to legitimacy (Oetzel et al , 2007; Witte et al , 2020; Darendeli et al , 2021; White et al , 2021).…”

Anti-globalization implications for NME performance

“…While earlier work is limited thus far, White et al (2021) point to research that can serve as a relevant platform for further investigation into the impact of anti-globalization sentiments and non-market threats. Greater awareness might enable MNEs affected to: more appropriately shape such as structure, strategy, governance and operations; and be better positioned to manage the volatilities currently inherent within international trade and investment activities.…”