Balancing to Utopia: Multinationals in Oligarchies

Abstract

We extend the obsolescing bargaining model (OBM) (associated with international joint ventures in authoritarian states) to show how it is relevant to multinational companies (MNCs) operating in evolving non-democratic oligarchic regimes. Using four critical cases from international business in Turkey and Russia, the paper demonstrates how the economic and attempted political transitions lead up to an international environment of heightened political risk. The heightened risk can be explained by the embeddedness of the original OBM in a triadic relationship between the MNC, the host government and a local (private) business partner. This increased complexity in the foundational nature of the OBM is what exposes international businesses to many more threat points. These could be increasing with democratisation, making the business environment less predictable thus more uncertain for managers to navigate in. ‘Balancing to utopia’ or maintaining stable positive relations in the triad (MNC-host government-local business partner) as prescribed by network theory may be the best strategy in oligarchies towards reducing political risk.