Electoral uncertainty and the multinational corporation: a conceptualization, firm-level effects and strategies

Chapter 4 develops a conceptual framework for elections as a distinct source of political uncertainty for multinational corporations (MNCs) that is insufficiently recognized in international business (IB) and IB policy. First, it defines electoral uncertainty along the characteristics of heterogeneous firm-level outcomes, temporal certainty and contextuality. For MNCs, the level of uncertainty resulting from elections is determined by several contingencies (i.e., the electoral system, electoral outcome and electoral/institutional environment). In a second step, it assumes a firm-level perspective and reviews the existing literature on firm-level implications of electoral uncertainty distinguishing between operating, investing and financing activities. The chapter then classifies MNCs’ strategies to manage electoral uncertainty. Finally, it contributes to existing research by discussing and synthesizing theoretical contributions and empirical evidence in a systematic manner. The chapter makes a case for further strengthening the IB and IB policy perspective in political and electoral uncertainty research.