Electoral Uncertainty and the Multinational Corporation: Firm-level Effects and Strategies

We develop a conceptual framework for elections as sources of political uncertainty and risk, arguing that electoral uncertainty MNCs face is characterized by temporal certainty, heterogenous firm-level outcomes and contextuality. Being embedded within national institutional environments, the level of electoral uncertainty is shaped by the election’s boundary conditions. We highlight the importance and suitability of studying elections in an international business (IB) context, which allows for gaining an understanding of the key topic areas related to the phenomenon, while simultaneously depicting the current state of research and emerging trends in this field. Assuming a firm-level perspective, we systematically review the existing body of knowledge for firm-level implications of political and electoral uncertainty. Specifically, we investigate the effects elections have on MNCs—structured along operating, investing and financing activities—and the strategies MNCs can employ to manage the uncertainty. We classify firm-level strategies into political activism, financial management and further strategies such as leveraging prior experience in international markets and with political change. This paper contributes to existing research by discussing and synthesizing theoretical contributions and empirical evidence in both a systematic and in-depth manner. It makes a case for further strengthening the IB perspective in political and electoral uncertainty research.