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

Fingerprint

multinational corporation
risk assessment
market
Nigeria
firm
foreign direct investment
regional difference
social attraction
internationalization
direct investment
competitiveness
foreign investment
globalization
Political risk
Multinational corporations
Risk assessment
Africa
rating
determinants
economics

Cite this

@article{7e6f2a528fd943429d1e768a6e24b225,
title = "Political risk assessment by multinational corporations in African markets: A Nigerian perspective",
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.",
keywords = "Africa, foreign direct investment, Internationalization, multinational corporations, political risk , Nigeria",
author = "Mshelia, {James B.} and Anchor, {John R.}",
year = "2019",
month = "3",
day = "1",
doi = "10.1002/tie.21964",
language = "English",
volume = "61",
pages = "133--142",
journal = "Thunderbird International Business Review",
issn = "1096-4762",
publisher = "John Wiley & Sons, Inc.",
number = "2",

}

Political risk assessment by multinational corporations in African markets : A Nigerian perspective. / Mshelia, James B.; Anchor, John R.

In: Thunderbird International Business Review, Vol. 61, No. 2, 01.03.2019, p. 133-142.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Political risk assessment by multinational corporations in African markets

T2 - A Nigerian perspective

AU - Mshelia, James B.

AU - Anchor, John R.

PY - 2019/3/1

Y1 - 2019/3/1

N2 - 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.

AB - 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.

KW - Africa

KW - foreign direct investment

KW - Internationalization

KW - multinational corporations

KW - political risk

KW - Nigeria

UR - http://www.scopus.com/inward/record.url?scp=85041620375&partnerID=8YFLogxK

U2 - 10.1002/tie.21964

DO - 10.1002/tie.21964

M3 - Article

VL - 61

SP - 133

EP - 142

JO - Thunderbird International Business Review

JF - Thunderbird International Business Review

SN - 1096-4762

IS - 2

ER -