The Role of Political Factor in Strategy Failures of MNCs In Emerging Economies

Introduction 6
Research background 6
Research scope and research questions 8
Chapter 1. Political factors and foreign investment in emerging economies 11
Literature review 11
1.1 Political factors: an overview 11
1.2 The Many Meanings of Political Risk 14
1.3 Traditional and new risks 20
1.4 Political risk: the new challenges 21
1.4.1 Social consensus 25
1.4.2 New political parties and movements 26
1.4.3 Rise of populism 26
1.4.4 Weak governments 27
Chapter 2: Methodology and data collection 29
Research design: Multi-Case Study 29
Data sources and cases selection 29
Cases selection 31
Chapter 3: Analysis of sampling cases 32
3.1 Analysis of Myitsone Dam 32
3.1.1 Project process 33
1.1.1 Analysis of reasons behind the unsuccessful investment 36
1.2 Analysis of case Dragon Mart Cancun 38
1.2.1 Project process 39
1.2.2 Analysis of reasons behind the unsuccessful investment 44
1.3 Analysis of case Colombo Port City 45
1.3.1 Project process 46
1.3.2 Analysis of reasons behind the unsuccessful investment 49
1.4 Analysis of case Bharti Airtel - MTN Group 50
1.4.1 Project process 50
The timeline of the Negotiation between Bharti-MTN 52
1.4.2 Analysis of reasons behind the unsuccessful investment 54
Cross-analysis of sampling cases 57
Table 3.1 Cross-cases Analysis of Sampling Cases 59
Findings and Discussion 67
Managerial implications 68
Conclusion 70
Bibliography 71

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From 2004 to 2012, the total flow of foreign direct investments more than doubled, reaching nearly USD 1,500 billion in 2012 (UNCTAD, 2013). As a way of international investment “by a resident in one economy with the objective of obtaining a lasting interest in an enterprise resident in another economy” (OECD, 2013), FDI has turned out to be one of the significant strategies for cross-fringe venture and a standout amongst the most dynamic drivers of monetary development. It assumes a huge part during the time spent capital arrangement for developing countries, particularly through trade of advances and administrative practices and learning. By acquiring capital, particularly as outside money, FDI creates greater venture inside the host nation and enhance its adjust of exchange, accordingly additionally improving the cycle of development. Alongside certain negative sides, FDI has created positive externalities and "overflow" impacts.
In 2015, worldwide streams of FDI ascended by around 40%, the most outstanding amount since the worldwide financial crisis started in 2008, to $1.8 trillion. In any case, this development did not convert into a comparable extension in gainful limit in all nations. This is a disturbing improvement in light of the venture needs connected with the recently received Sustainable Development Goals and the yearning activity imagined in the point of interest Paris Agreement on environmental change.
Directions on the proprietorship and control of organizations are fundamental in the speculation administration of generally nations. In any case, in a period of complex multinational possession structures, the basis and adequacy of this strategy instrument needs a far reaching re-appraisal (UNCTAD, 2016).
In 2016, global flows of foreign direct investment fell by about 2 per cent, to $1.75 trillion. Investment in developing countries declined even more, by 14 per cent, and flows to LDCs and structurally weak economies remain volatile and low. Although UNCTAD predicts a modest recovery of FDI flows in 2017-2018, they are expected to remain well below their 2007 peak (UNCTAD, 2017).
South-based, particularly Chinese outward foreign direct investment (FDI) has expanded emphatically as of late and is relied upon to proceed with its lofty development (Buckley et al. 2007; Z. Li 2009; Luo, Xue, and Han 2010). Previous research has focused on reasons for the outward internationalization on both the environment-specific level (e.g., Buckley et al., 2007; Deng 2009; Witt and Lewin 2007; Yang, Jiang, Kang, and Ke 2009) and the firm-specific level (e.g., Alon Yeheskel, Lerner, and Zhang 2013; Banalieva and Sarathy 2011; T.-J. Chen 2006; Deng 2003 2009; Z. Li 2009; Liu, Xiao, and Huang 2008; Morck et al. 2008). Albeit first experiences about the internationalization thought processes, modes, and market-passage procedures of Chinese firms have been increased, minimal exact research has been led on how Chinese firms really work in abroad markets (Child and Rodrigues 2005; Hu and Wang 2009; Y Liu and Woywode 2013). Especially it is true amid current decade the new pattern of interest in developing business sector nations frame Chinese firms and other creating nations.
In spite of the fast increment of FDI from China and other developing countries and emerging economies, episodic proof has demonstrated that the financial execution of these FDIs changes considerably, and exasperatingly, a vast extent of them fall flat (Liu and Waldemar 2011).
However, lately, because of the ascent of hostile to globalization considerations, and the religious, ethnic and geopolitical clashes, the transnational activities of south-based firms are confronting increasingly abroad venture dangers. For instance, exchange rate changes, credit crisis and other market risks, political, legal, cultural differences and other non-market risks.
Take ventures contributed from China as examples, Chinese organizations have experienced incessant obstacles to foreign direct investment. As China's outward investment an ever-increasing number of businesses and locales, there are likewise expanding boundaries to outside speculation. According to the American Enterprise Institute and the Heritage Foundation, statistics show that in the vicinity of 2005 and the primary portion of 2014, a sum of 130 instances of Chinese remote direct speculation ventures have been obstructed by investment hindrances. Developed countries and regions such as the United States, the European Union, Australia and other countries have become the high-risk zones for Chinese enterprises to encounter overseas investment barriers. Among them, the most conspicuous cases were in USA and Australia. During the period from 2005 to the first half of 2014, there were 21 cases in Australia and 19 cases in the United States in which Chinese enterprises' foreign direct investment (FDI) failed because of investment barriers. In the European Union, 16 cases, accounting for the total number of Chinese enterprises encountered foreign direct investment barriers.
According to a report by the Beijing-based think tank Centre for China and Globalization, which analysed 120 cases of Chinese companies' failed attempts to invest abroad, political factors made up 25 percent of the reasons.

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