Research summary: We analyze how a host market’s institutional context can influence a multinational enterprise’s (MNE’s) senior management’s choice and deployment of corporate political activity (CPA). First, we argue that a non‐engaged approach to CPA is likely to be chosen when senior management perceives high host country political risk, arising not only from host country political institutions, but also from the distance between home and host government relations. Second, we propose that the deployment of this approach can require active adaptation through four political strategies: low visibility, ensuring a minimal degree of general attention from other actors; rapid compliance, entailing high speed actions to obey the rules; reconfiguration, involving rearranging the MNE’s structure and processes for competitiveness; and anticipation, implying the prediction of public policy and analysis of interest groups to anticipate responses. Managerial summary: Senior managers of multinational enterprises often examine when and how to engage, or not to engage, with host governments. We argue that senior managers are likely to choose to evade engagement with a host government when they perceive high host country political risk, not only through public political risk ratings, but also via their home and host government relations. We show that this choice can require senior managers to lead active adaptation through four strategies: low visibility, enabling the MNE to operate under the radar of host governments; rapid compliance, entailing high speed actions to obey the rules; reconfiguration, involving rearranging the MNE’s structure and processes for competitiveness; and anticipation, implying the prediction of public policy and analysis of interest groups to anticipate responses. A video abstract is available at https://youtu.be/DL1LlQEhGU0.

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Geopolitical risk is a major concern for top managers of multinationals around the globe. However, top managers often find it challenging to assess how geopolitical risk can impact their multinational’s operations. Hence, this article offers top managers a multi-level approach for the holistic assessment of geopolitical risk that can help them identify their multinational’s degree of exposure. This multi-level approach integrates insights of over one hundred top managers of multinationals, and involves conducting a tailored examination at the supranational, international, national, industry, and firm levels of analysis to factor geopolitical risk more effectively into strategic decision making.

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This chapter analyzes the political strategies of subsidiaries of multinational enterprises (MNEs). In doing so, I review the literature at the crossroads of corporate political strategy and international business (IB) strategy and identify four relevant themes. First, the types of political strategies deployed by subsidiaries dichotomize into engaged and non-engaged; and into legal and illegal. Second, the responses of subsidiaries to host political contexts, involve exercising voice, exit, or loyalty through different types of political strategies. Third, the determinants that explain the choice, approach (transactional or relational), level of participation (individual or collective), intensity, or dissimilarity of the political strategies of subsidiaries, can be clustered into five levels of analysis: home country, host country, multinational, subsidiary, and managerial. Fourth, the main outcomes of subsidiary political strategies are legitimacy in the host country and performance. The chapter concludes with promising opportunities for future research on political strategies from a subsidiary perspective, a growing area of study in IB strategy.