Geopolitical jockeying: Economic nationalism and multinational strategy in historical perspective

Abstract

Research Summary We explore multinational strategy formation in the context of rising economic nationalism. Specifically, we examine how firms develop strategies to capitalize on the historical and aspirational attributes of national identity. Analyzing the histories of two German multinationals in late colonial India, we find that these firms engaged in “geopolitical jockeying” to delegitimize rival multinationals and position themselves as complementary to the economic and political goals of the host nation. Toward that end they employed “aspirational political practices,” addressing the inherently future‐oriented character of nationalism, and invested in the development of political capabilities to gather information and shape perceptions of national contexts. The paper contributes to a more robust conceptualization of nations and nationalism and their role in the formation of international competition and strategy. Managerial Summary Rising economic nationalism can create political and economic opportunities as well as threats for multinational firms. Through a historical analysis of the emerging strategy of two German companies—Siemens and Bayer—in late colonial India, we show how firms can engage in “geopolitical jockeying” to delegitimize rival multinationals and position themselves as complementary to the economic and political goals of host nations. To do so the companies engaged in “aspirational political practices,” addressing the inherently future or goal‐oriented aspects of nations, and created political capabilities designed to both gather intelligence on and shape the nationalist movements. The paper uses history as a mirror for reflecting on the causes and consequences of economic nationalism for international strategy in our own time.

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

“…Such actions would make them more politicized and exposed to bilateral political relations. Others may emphasize political ties in the host country as means to secure access to resources (De Villa, Rajwani, Lawton, & Mellahi, 2019;White, Fainshmidt, & Rajwani, 2018), or to engage in 'geopolitical jockeying' aimed at delegitimizing rivals as shown by Lubinski and Wadhwani (2020) for colonial India. On the other hand, how do MNE subsidiaries respond to disruption of political ties through changes in power positions in government?…”

Foreign direct investment along the Belt and Road: A political economy perspective

“…VOC focuses on institutional complementarities between actors within a country and the path dependence of changes. Geopolitical studies fill this gap and illustrate how geopolitics affects MNEs and FDI (Lubinski & Wadhwani, 2020;Witt, 2019a). In the following section, we will use these two theoretical streams to develop a political economy perspective of FDI along the Belt and Road.…”

“…IB scholarship has widely documented that MNEs can take a strategic forward-looking perspective and develop both proactive and defensive non-market strategies to shore up their own legitimacy (Mellahi et al, 2016). Little consideration, however, has been paid to geopolitics as a context for legitimacy building (Lubinski & Wadhwani, 2020). Through lobbying and corporate social responsibility actions, companies may aim to frame discourses around their company that seek to increase their selection chances through political positioning.…”

“…This study also demonstrates the moderating role of ''geopolitical jockeying''. Existing IB studies largely focus on how MNEs use geopolitical jockeying strategies to enhance their political positioning (e.g., Lubinski & Wadhwani, 2020). Empirical studies of BRI show that third-party MNEs take advantage of the legitimacy gap and bargaining power of Chinese actors to get involved in the BRI projects (e.g., KMPG, 2019;Zhang, 2019).…”

“…Third, we identify viable geopolitical jockeying strategies that local firms and third-country MNEs can adopt to increase their likelihood of being chosen for a BRI project. Geopolitical jockeying refers to political positioning strategies that gain legitimacy vis-à-vis rival firms (Lubinski & Wadhwani, 2020). Such non-market strategies can increase a firm's selection chances by allowing firms to position themselves as complementary to both China's and the host country's goals, thus increasing their selection chances.…”