Political risk analysis in relation to foreign direct investment: A view from the hospitality industry

Sandro Formica (Research Associate, Virginia Polytechnic and State University, Department of Hospitality & Tourism Management, 362 Wallace Hall, Blacksburg, Virginia 24061–0429)

The Tourist Review

ISSN: 0251-3102

Publication date: 1 April 1996


The purpose of this paper is to explore the importance of the political risk factor that, according to the literature, seems to excerpt a powerful influence in determining foreign direct investment (FDI) decisions by multinational firms. The first part of this paper is based on a thorough review of the literature concerning political risk, its definition, and how it relates to FDI. This part also aims to explore the current trend of academic publications as they relate to political risk and FDI. The second part is more critical in nature and attempts to explain the discrepancies determined by past literature, particularly when depicting the relationship between political risk and FDI. In its third part, this paper shows the importance of global expansion in the hospitality industry and the techniques applied in that sector in order to minimize political risk. The concluding comments, in the last part, are offered together with some recommendations to multinational corporate management.



Formica, S. (1996), "Political risk analysis in relation to foreign direct investment: A view from the hospitality industry", The Tourist Review, Vol. 51 No. 4, pp. 15-23. https://doi.org/10.1108/eb058233

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Copyright © 1996, MCB UP Limited

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