Abstract
One distinctive feature of the multinational enterprise is the need for management to adequately balance the political risk exposure of the organisation throughout its global operations. Although managements are becoming increasingly aware of the importance of political factors in determining the outcomes of strategic decisions, systematic attempts to evaluate risk exposure are not common. Indeed there is some evidence to suggest that many multinationals are less sophisticated in their attitude to foreign investment decisions than they are to domestic opportunities.1 An earlier survey actually revealed that few major US multinationals conducted a systematic evaluation of political risks ‘involving their identification, their likely incidence and their specific consequences for company operations’.2
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References
James R. Piper, Jr., ‘How US Firms Evaluate Foreign Investment Opportunities’, MSU Business Topics, summer 1971, p. 11.
Franklin R. Root, US Business Abroad and the Political Risks, MSU Business Topics, winter 1968.
David K. Eikeman and Arthur I. Stonehill, Multinational Business (France, Addison-Wesley Publishing Company, 1973), p. 229.
Obstacles and Incentives to Private Foreign Investments 1967–1968 Vol. 1 (New York: The Conference Board, 1969).
Stobaugh, How to Analyse Foreign Investment Climates, Harvard Business Review (Sept-Oct 1969), p. 103.
B. Lloyd, ‘The Identification and Assessment of Political Risk in the International Environment’, Long Range Planning, Dec 1974, p. 29.
This system was developed by C. E. Johns and the next section is drawn from his unpublished Master’s dissertation, Manchester Business School, 1975.
J. Grewe, ‘The Management of Political Risk by the MNC’, unpublished MBA dissertation, Manchester Business School, 1977, chapter 4.
Ibid., pp. 66–8.
Ibid., pp. 93–4.
The scheme for this part of the chapter has been freely adapted from that used by Eikeman and Stonehill, op. cit., chapter 10.
Eikeman and Stonehill, op. cit., p. 238.
Jack N. Behrman, ‘International Divestment: Panacea or Pitfall’, Looking Ahead, National Planning Association, Nov-Dec 1970.
‘Financing Foreign Operations’, Business International Apr 1971, pp. 4556.
Ibid., pp. 58–8c.
Robock and Simmonds, op. cit., p. 223.
Eikeman and Stonehill, op. cit., p. 243.
L. G. Franko, ‘Joint Venture Divorce in the Multinational Company’, Columbia Journal of World Business, May-June 1971, pp. 13–22.
Decision Making in International Operations’, op. cit., p. 51.
Robock and Simonds, op. cit., p. 226.
The Fashionable World of Project Finance - Some Major Projects, The Banker Jan 1976, pp. 77–81.
Robock and Simmonds, op. cit., p. 223.
Bribery, Corruption or Necessary Charges?’ Multinational Business, No. 3, 1975.
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© 1978 Derek F. Channon with Michael Jalland, Manchester Business School
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Channon, D.F., Jalland, M. (1978). The Management of Political Risk. In: Multinational Strategic Planning. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-02855-9_9
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DOI: https://doi.org/10.1007/978-1-349-02855-9_9
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