Configuring relational political resources to navigate host-country institutional complexities: insights from anglophone sub-Saharan Africa

| Magnus Hultman, Journal of International Business Studies

When operating in countries with weak formal institutions, knowing what ties with host-country political entities are beneficial to help multinational enterprises find success can be extremely useful.

This study used survey and archival data from 604 multinational enterprise subsidiaries in 23 anglophone sub-Saharan African countries to examine what the ideal configuration of ties to the three political resources –host-country government actors, local chieftains, and religious leaders – contributes the most to multinational subsidiary performance.

Researchers found that forging relationships between subsidiaries and host-country government actors, local chieftains and religious leaders generates regulative, normative, and cultural-cognitive political resources. The study indicated the closer a subsidiary comes to an ideal configuration of the three political resources obtained from corporate political activity, the higher the sales growth.

The study found that local chieftains wield significant authority in many African societies and ties with them can be enlisted to strengthen the legitimacy of a subsidiary and provide protection for its investments. An ideal configuration of political resources features ties to all three political institutions.

The performance benefits of relational political resources are amplified when market conditions are dysfunctional. Having an ideal configuration of relationships with political resources enables multinational enterprises to grow sales and profits in dysfunctional environments.

Boso, N., Amankwah-Amoah, J., Eussman D., Olabode, E., Bruce, P., Hultman, M., Kutsoati, J., & Adeola, O. (2022). Configuring relational political resources to navigate host-country institutional complexities: insights from anglophone Sub-Saharan Africa, Journal of International Business Studies. https://doi.org/10.1057/s41267022-00594-8