Political Risk and the Business Environment: An Examination of Core Challenges

Abstract:     
This paper examined political risk as it affects businesses generally, and identified core challenges. We propose a modified integrative strategy for the management of political risk having argued that the present global economic crises increase political risk concerns for businesses. By recognizing the varying dimensions of political risk in business and the absence of a unified definition of political risk, we observed that even local businesses are not insulated from political risk. Given the shortcomings of implementing either the defensive or the integrative strategy strictly, we suggest that the integrative strategy be modified to allow for foreign businesses to retain control of corporate executives, and to be able to shift risk via government guarantees. This position is consistent with current research result in this subject area.

Keywords: Political Risk, Foreign Businesses, Modified Integrative Strategy

JEL Classification: F1, L14, O19

Accepted Paper Series