Learning from Political Change and the Development of MNCs’ Political Capabilities: Evidence from the Global Mining Industry

Naoki Yasuda, Hitoshi Mitsuhashi

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

Previous studies have suggested that (1) a type of organizational capabilities—namely, political capabilities—are required for multinational corporations (MNCs) to grow in global markets, (2) political capabilities are important for building productive relations with governments in politically risky host countries, and (3) MNCs can develop political capabilities by accumulating foreign experiences. However, empirical studies have found both positive and negative effects of such experiences on global market expansions. This study attributes such mixed findings to our lack of understanding about MNCs’ procurement processes of political capabilities and proposes types of experiences critical for such procurements by focusing on their reactions to political changes in host countries. Using data on the global mining industry and political changes in host countries, we find that MNCs develop political capabilities and thus make entries into politically risky host countries when they accumulate the experience of partially divesting some of their assets after political changes in host countries. We also find that MNCs are less likely to enter such countries if they have more experiences of exiting from host countries following political change.

Original languageEnglish
Pages (from-to)749-774
Number of pages26
JournalManagement International Review
Volume57
Issue number5
DOIs
Publication statusPublished - 2017 Oct 1
Externally publishedYes

Keywords

  • Foreign direct investment
  • Market entry
  • Market exit
  • Organizational experience
  • Political capabilities
  • Political change

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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