A unified model of political risk
Political risk is a complex phenomenon. This complexity has incentivized scholars to take a piecemeal approach to understanding it. Nearly all scholarship has targeted a single type of political risk (expropriation) and, within this risk, a single type of firm (MNCs) and a single type of strategic m...
| Main Authors: | , , |
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| Format: | Journal article |
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J a i Press Inc.
2015
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| _version_ | 1797104589518929920 |
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| author | Johnston, N Benjamin Graham Allison Kingsley |
| author_facet | Johnston, N Benjamin Graham Allison Kingsley |
| author_sort | Johnston, N |
| collection | OXFORD |
| description | Political risk is a complex phenomenon. This complexity has incentivized scholars to take a piecemeal approach to understanding it. Nearly all scholarship has targeted a single type of political risk (expropriation) and, within this risk, a single type of firm (MNCs) and a single type of strategic mechanism through which that risk may be mitigated (entry mode). Yet "political risk" is actually a collection of multiple distinct risks that affect the full spectrum of foreign firms, and these firms vary widely in their capabilities for resisting and evading these risks. We offer a unified theoretical model that can simultaneously analyze: the three main types of political risk (war, expropriation, and transfer restrictions); the universe of private foreign investors (direct investors, portfolio equity investors, portfolio debt investors, and commercial banks); heterogeneity in government constraints; and the three most relevant strategic capabilities (information, exit, and resistance). We leverage the variance among foreign investors to identify effective firm strategies to manage political risk. By employing a simultaneous and unified model of political risk, we also find counterintuitive insights on the way governments trade off between risks and how investors use other investors as risk shields. |
| first_indexed | 2024-03-07T06:35:49Z |
| format | Journal article |
| id | oxford-uuid:f7981765-c2f9-4ba6-98ea-8e64949f255b |
| institution | University of Oxford |
| last_indexed | 2024-03-07T06:35:49Z |
| publishDate | 2015 |
| publisher | J a i Press Inc. |
| record_format | dspace |
| spelling | oxford-uuid:f7981765-c2f9-4ba6-98ea-8e64949f255b2022-03-27T12:43:50ZA unified model of political riskJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:f7981765-c2f9-4ba6-98ea-8e64949f255bSymplectic Elements at OxfordJ a i Press Inc.2015Johnston, NBenjamin GrahamAllison KingsleyPolitical risk is a complex phenomenon. This complexity has incentivized scholars to take a piecemeal approach to understanding it. Nearly all scholarship has targeted a single type of political risk (expropriation) and, within this risk, a single type of firm (MNCs) and a single type of strategic mechanism through which that risk may be mitigated (entry mode). Yet "political risk" is actually a collection of multiple distinct risks that affect the full spectrum of foreign firms, and these firms vary widely in their capabilities for resisting and evading these risks. We offer a unified theoretical model that can simultaneously analyze: the three main types of political risk (war, expropriation, and transfer restrictions); the universe of private foreign investors (direct investors, portfolio equity investors, portfolio debt investors, and commercial banks); heterogeneity in government constraints; and the three most relevant strategic capabilities (information, exit, and resistance). We leverage the variance among foreign investors to identify effective firm strategies to manage political risk. By employing a simultaneous and unified model of political risk, we also find counterintuitive insights on the way governments trade off between risks and how investors use other investors as risk shields. |
| spellingShingle | Johnston, N Benjamin Graham Allison Kingsley A unified model of political risk |
| title | A unified model of political risk |
| title_full | A unified model of political risk |
| title_fullStr | A unified model of political risk |
| title_full_unstemmed | A unified model of political risk |
| title_short | A unified model of political risk |
| title_sort | unified model of political risk |
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