Political Capital and MNE Responses to Institutional Voids

Abstract

This study explores how multinational enterprises (MNEs) take advantage of their ownership-based political capital – political ties and political identity – in responding to institutional voids in host country contexts. Investigating multiple cases of central and local Chinese state-owned enterprises in Africa, we identify unique responding strategies comprising allied fleet and co-dependent alliance formations to overcome human capital voids, and dual management and closed-door management strategies to address industry standard voids. We propose a typology which extends the theory of MNE responses to institutional voids not only by adding the political dimension to strategy formation in responding to institutional voids, but also by providing greater insights into MNE strategies to convert home-based political capital for better response to host country institutional voids. Show more