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This paper aims to investigate the extent to which locating primary industry subsidiaries in politically unstable countries impacts their survival. The authors argue that foreign multinational enterprises in less stable political environments can shape policies that are impactful on the costs of operating in primary industries and avoid compliance with more stringent policies at home.

Using a sample of 753 primary sector investments of Japanese multinational enterprises during the period 1986 to 2013, the authors conduct a parametric survival analysis of the relationship between political stability and subsidiary survival.

Political instability has a slight, curvilinear relationship with subsidiary survival, such that both high and low stability are associated with lower exit hazard, while moderate levels of stability increased exit hazard. This nonlinear relationship is stronger for efficiency-seeking subsidiaries, and weaker for market-seeking subsidiaries.

This research contributes to the debate around the pros and cons of globalization by examining the extent to which firms benefit by offshoring primary sector investments to avoid more costly legal requirements at home. The results suggest that this non-market strategy should be mitigated through appropriate policy measures and provides evidence that those policies already implemented are effective.

The international strategies of multinational enterprises are increasingly augmented by insights on, and approaches to, external stakeholders and nonmarket dynamics. The rise of populism and increased geopolitical uncertainty have accelerated these efforts, particularly for business leaders anticipating and engaging external agents, events, and issues that challenge the strategic objectives of their enterprises.

In this paper we explain why the increased preponderance of populism and geopolitical uncertainty are concurrently posing an existential threat to the post-Cold War global economy predicated on free trade and (relatively) open borders and, consequently, challenging the structures and strategies of international business.

We provide an overview of the four papers in our special issue and consider how each advances insights on how multinational enterprises effectively navigate the nonmarket uncertainties of the contemporary global economy. We then advance four important areas for international business research on multinational nonmarket strategies: (i) resilience and legitimacy; (ii), diversification; (iii), market and nonmarket strategy integration; and (iv), institutional arbitrage.

We anticipate that nonmarket strategy scholars can build on these themes to assess how nonmarket strategies can better enable multinational enterprises to survive and thrive in an age of heightened global risk and uncertainty.

This paper and the related special issue provides novel theoretical insights by drawing attention to the relatively under-researched realm of multinational enterprise nonmarket strategy, particularly in populist contexts and during periods of geopolitical uncertainty. Importantly, we identify four promising domains – resilience and legitimacy, diversification, the integration of market and nonmarket strategy, and institutional arbitrage – for international business scholars investigating nonmarket strategy to consider. We anticipate that our paper, as well as other papers in this special issue, contribute further momentum to this burgeoning area of research.