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Web of Proceedings - Francis Academic Press
Web of Proceedings - Francis Academic Press

The Influence of Political Risk on the Internationalization of Chinese Multinational Enterprises

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DOI: 10.25236/icess.2019.233

Author(s)

Jiahui Wang

Corresponding Author

Jiahui Wang

Abstract

Political risk is not only a threat for MNEs, but also an opportunity. Exposure to political risk, MNEs will use the non-market strategy of political action more widely to influence the policies and regulations of the host government in an attempt to create a favorable institutional environment. In order to specifically verify the influence of political risk on MNEs, this paper selected 89 Chinese MNEs with investment in 135 countries as a sample. Through the negative binomial regression, we can find that the political risk has a positive effect on the internationalization of MNEs. Chinese MNEs should accumulate experience from successful investment in different political environment and take note of the potential opportunities. Managers of MNEs should see more about the potential opportunities of the political risk rather than a threat.

Keywords

Political risk, MNEs, FDI, Internationalization