Political risk assessment by multinational corporations in African markets: A Nigerian perspective

James B. Mshelia, John R. Anchor

Research output: Contribution to journalArticle

Abstract

Political risk assessment (PRA) is one of the determinants of foreign direct investment (FDI) and the competitiveness of multinational corporations (MNCs), yet little is known about its use in African markets. This study critically investigates the PRA techniques used by MNCs in Nigeria and their applicability. It uses a multimethod approach to analyze data collected from MNCs and the data set of the International Country Risk Guide (ICRG) PRA annual rating for Nigeria from 2011 to 2015. The findings reveal that most firms use qualitative, rather than quantitative, PRA techniques. Regional variations in the outcome of PRA within Nigeria could also contribute to the low use of quantitative techniques. This article identifies that firms are prepared to invest in Nigeria, in spite of high political risk, due to its economic and financial attractiveness. This article's findings offer some implications for practice with some suggestions on how it could influence firms’ internationalization and their conduct of PRA.
Original languageEnglish
Pages (from-to)133-142
Number of pages10
JournalThunderbird International Business Review
Volume61
Issue number2
Early online date4 Feb 2018
DOIs
Publication statusPublished - 1 Mar 2019

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