Flying under the radar: Foreign firm visibility and the efficacy of political strategies in emerging economies

Although emerging markets hold great potential, foreign firms operating in those markets are exposed to a comparatively higher level of risk as compared to developed markets. We examine the role of foreign firms’ visibility in shaping the effect of the strategies they deploy to reduce their exposure to environmental risk. Building on and extending research on political strategies we develop hypotheses and test them against data from 173 MNE subsidiaries operating in six emerging economies. We find that visibility affects not only the strength, but also the direction of the association between political strategies and foreign firms’ exposure to risk. Our findings enhance understanding of the use of different political strategies for reducing their exposure to risk and of the moderating role of their visibility in emerging markets.

► 173 MNE subsidiaries in 6 emerging economies were surveyed regarding political risk. ► Visibility affects not only the strength, but also direction of association between political strategies and foreign investors’ risk exposure. ► This paper enhances understanding of the use of political strategies for reducing risk exposure. ► We discuss the moderating role of firm visibility in emerging markets.