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The “costs of doing business abroad” in a cross-border context characterised by extreme political volatility

Torbjørn Bjorvatn (School of Business and Law, University of Agder, Grimstad, Norway)
Trond Randøy (School of Business and Law, University of Agder, Kristiansand, Norway and Center for Corporate Governance, Copenhagen Business School, Copenhagen, Denmark)

Review of International Business and Strategy

ISSN: 2059-6014

Article publication date: 6 December 2022

33

Abstract

Purpose

The purpose of this study is to describe and explain the organisation design antecedents of coordination, learning and trust in an international strategic alliance in a cross-border context characterised by extreme political volatility.

Design/methodology/approach

The research was carried out as a single-case study in situ in a humanitarian international strategic alliance in Pyongyang, the Democratic People’s Republic of Korea (North Korea).

Findings

In addition to explaining the effects of interface, specialisation, formalisation and centralisation on coordination, learning and trust, the study demonstrates the influence of classic international business (IB) “costs of doing business abroad” (Hymer, 1960/1976) on the same organisational outcomes. Moreover, the study identifies intergovernmental engagement/containment/disengagement as a contextual antecedent of both organisation design and outcomes.

Originality/value

The study extends IB theory by indicating that mainstream IB perspectives may not fully explain intraorganisational outcomes in cross-border contexts characterised by extreme political volatility. Notably, the study suggests that complementary constructs such as intergovernmental engagement are needed to account for the additional costs incurred by such settings.

Keywords

Citation

Bjorvatn, T. and Randøy, T. (2022), "The “costs of doing business abroad” in a cross-border context characterised by extreme political volatility", Review of International Business and Strategy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/RIBS-03-2022-0032

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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