Political Strategies of Multinational Enterprises in Emerging Economies : A Theoretical Model

In this study we have argued that MNEs in emerging economies face a different institutional environment which needs to be understood for its economic success. The performance of MNEs depends on both the ability of its managers to shape the public policies of their host government and their ability to succeed directly in the marketplace. Therefore, an MNE must devise an effective political strategy to successfully deal with the legal and political dynamics of its environment in the emerging economy. Towards this end we have presented a theoretical framework, mostly using institutional theory, with specific propositions that predict the effect of different variables on the political strategies. Specifically, we have outlined firm, industry and institutional level factors that influence the usage and choice of the political strategies formulated by MNEs to shape its broader institutional context. By doing so, we extend the literature on political strategies that has so far focused only very little on the perspectives of emerging economies