Emerging market multinationals and the politics of internationalization

Abstract

Firms’ internationalization, the most essential topic in the international business discipline, have in recent years become highly entangled with political processes at multiple levels. Neither firm strategies and processes, nor IB theories and models have yet caught up with increasing politicization. In this paper, we pose three questions: why are firms increasingly affected by politics in their internationalization? How do firms respond to the increasing role of politics? And finally, how do theories considered foundational across IB research incorporate politics? We discuss how the resource-based view, transaction cost economics, institutional theory and agency theory relate to politics. Further, we identify eight predominant dimensions where firms are affected by politics. Finally, we suggest that the increasing role of politics can be ascribed not only to specific macro-level historical events but also to more fundamental micro-level transformations in prevalent institutional configurations of firms’ value adding activities.