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1 – 2 of 2Andrei Panibratov, Olga Garanina, Abdul-Kadir Ameyaw and Amit Anand
The authors revisit the traditional OLI paradigm with the objective to allocate politics within the set of internationalization advantages by building on the political strategy…
Abstract
Purpose
The authors revisit the traditional OLI paradigm with the objective to allocate politics within the set of internationalization advantages by building on the political strategy literature. The authors outline the specific role of political advantage that facilitates and propels the international expansion of state-owned multinational enterprises (SOMNEs) from emerging markets.
Design/methodology/approach
A conceptual paper which explains the role of political advantage in the internationalization of SOMNEs. The authors expand the scope of the OLI to capture the impact of firms' home governments' policies and relationships with host countries which are leveraged by SOMNEs in their internationalization.
Findings
The authors define political advantage as a new type of advantage which depends on and is sourced from external actors. The authors argue that P-advantage is a multifaceted and unstable part of POLI composition, which is contingent on political shifts and may be leveraged by various firms. The authors also assert that political capabilities have limitations in sustaining political advantage, which may be compensated via enhancing the political activity of firms.
Originality/value
The authors conceptualize the POLI-advantages paradigm for the internationalization of SOMNEs by proposing that in addition to the traditional ownership, location, and internalization advantages, firms can capitalize on their political advantage to enter markets where internationalization might have been difficult without their political connections.
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Keywords
Asmund Rygh and Carl Henrik Knutsen
Recent international business research finds that state-owned multinational enterprises (SOMNEs) invest relatively more in politically risky host countries than do privately-owned…
Abstract
Purpose
Recent international business research finds that state-owned multinational enterprises (SOMNEs) invest relatively more in politically risky host countries than do privately-owned multinational enterprises (MNEs). This study aims to investigate theoretically and empirically whether state ownership mitigates the impact of host-country political risk on subsidiary economic risk.
Design/methodology/approach
The authors link theoretical arguments on state ownership to arguments from non-market strategy literature to outline mechanisms whereby state ownership can buffer subsidiaries from political risk, weakening the link between host-country political risk and earnings volatility in subsidiaries. Using a data set on Norwegian MNEs’ foreign subsidiaries across almost two decades, the authors test this prediction using both matching methods and panel regressions.
Findings
While standard panel regressions provide empirical support only for the infrastructure sector and for the highest political risk contexts, nearest-neighbour matching models – comparing only otherwise similar private- and SOMNE subsidiaries using the full sample – reveal more general support for the political risk mitigation hypothesis.
Originality/value
The study presents the first comprehensive analysis of whether state ownership can mitigate the effect of political risk on subsidiary economic risk.
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