Political strategies, entrepreneurial overconfidence and foreign direct investment in developing countries

Foreign investors in developing countries are exposed to comparatively high levels of environmental uncertainty and often use political activities to manage this uncertainty. At the same time, international entrepreneurs seek out uncertain environments, because of the potential opportunities and upside potential associated with uncertain situations. We investigate the interplay between political strategies and entrepreneurial overconfidence in managing environmental uncertainty based on an in-depth case study of an entrepreneurial foreign direct investment (FDI) project in Ghana. Our results provide insight into the individual and combined roles that political strategies and entrepreneurial overconfidence can play in international entrepreneurial decision-making in highly uncertain environments. In particular, we find that the adoption of political strategies can exacerbate entrepreneurial overconfidence and affect the survival of an investment.