A stranger in a strange land: Vicro political risk and the multinational rm 1J1

TabIe 1. A micro poIiticaI risk assessment modeI

Column 1 Column 2 Column J Column 4 Column 5 Column 6
Factor's
importance
rating
Factor's impact
on rm: 7ery bad
to very good
Factor's
occurrence
likelihood
Factor's
risk
assessment
0verall
potential
effect
Fcctor descrpton [0 to 5] [ 4 to 0 to +4] [1 to 5] [Col. J
Col. 4]
[Col. 2
Col. 5]
INTEPNAL ANTECE0ENTS
Economic-reIated factors
1. Labor conditions 5 4 4 16 80
2. Congruence with national economic
interests and goals
5 J 5 15 75
J. Availability of alternative suppliers 0 0 0 0 0
Society-reIated factors
1. 0egree of power distance 2 J 5 15 J0
2. 0egree of uncertainty avoidance J J 4 12 J6
J. 0egree of collectivism 2 0 0 0 0
Covernment-reIated factors
1. Firmspecic regulatory actions 5 4 2 8 40
2. 0egree of nationalism 4 4 J 12 48
J. Subsidization of local industry J 1 1 1 J
4. Transparency and corruption 5 2 4 8 40
EXTEPNAL ANTECE0ENTS
Economic-reIated factors
1. 0egree of economic dependence
on the home country
1 0 1 0 0
2. lnvolvement in regional economic
agreements (e.g., WT0, NAFTA)
5 1 4 4 20
J. 8alance of payments 1 0 1 0 0
Society-reIated factors
1. lnuence of adverse international
activist groups
J 2 J 6 18
2. Extent of cultural distance 0 0 1 0 0
J. Extent of international societal
disputes
2 2 1 2 4
Covernment-reIated factors
1. 0iplomatic stress w/the home country 5 J 2 6 J0
2. lnvolvement in regional political
agreements (e.g., NAT0, UN)
1 2 2 4 4
J. Extent of currency (in)stability 5 J 1 J 15
FIPh-PELATE0 FACTDPS
Contribution of the rmlproject to the IocaI economy
1. Level of technology transfer 4 0 80 0 0
2. Exports generated by rm/project 5 4 5 20 100
J. Size of operation 4 J 5 15 60
argaining power of the rm reIative to the government
1. 0ependence of rm on local market 5 1 4 4 20
2. Extent of natural resource seeking J 1 4 4 12
J. Level of rm diversication 2 0 1 0 0
Covernance structure
1. 0egree of ownership 5 2 5 10 50
2. Extent of nancial policies adverse to the
80P (e.g., transfer pricing)
2 1 1 1 2
J. lntracorporate transfers 2 1 J J 6