Alternative assumptions are advanced regarding the political nature of international business and the role of government as a factor of production, which firms must manage in their international value-added chains. Based on a model of business political behavior, various propositions are developed regarding the interactions among firm, industry, and nonmarket factors as well as the impact they have on various forms and intensities of political behavior, as affected by strategic objectives. Finally, the strategic-theorizing implications of such behavior are discussed in the context of the recent emphasis on resource-based models of strategy management.

International-Business Political Behavior: New Theoretical Directions

Recent writings on problems of the international economy have focused attention primarily on changes in the international system. This paper attempts to show that foreign economic policy can be understood only if domestic factors are systematically included in the analysis. The paper's first part groups the recent literature into three paradigms which distinguish between three international effects. The second part offers a comparison of the differences between a state-centered policy network in France and a society-centered network in the United States. The third part of the paper combines the arguments of the first two and analyzes French and American commercial, financial, and energy policies as the outcome of both international effects and domestic structures. These case studies show that domestic factors must be included in an analysis of foreign economic policies. The paper's main results are analyzed further in its fourth part.

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0020818300003726

International relations and domestic structures: Foreign economic policies of advanced industrial states

This article presents an issue-area approach to the analysis of relations between multinational enterprises and governments. The concept of issue-areas is drawn from a body of political science literature that has been neglected in the literature of international business. The central theme of the analysis is that business-government relations vary systematically across issue-areas in their interactions and outcomes. An issue-area typology from the political science literature is applied to MNE-government relations concerning inbound foreign direct investment in the United States. The article adopts a heuristic approach, as is appropriate in this first stage in the development of an issue-area theory of MNE-government relations.

An Issue-Area Approach to the Analysis of MNE-Government Relations

This article presents the findings of an investigation of the impact of conflictive and cooperative political events in 62 host countries on Japanese foreign direct investments during the period 1965 to 1980. In addition, the study provides evidence of the relative importance of economic conditions and intergovernmental relationships as determinants of foreign direct investments by Japanese firms. It is argued that in analyzing the effect of political events on foreign direct investments, one must not only take into account the conflictive political conditions within the host countries, but also cooperative political developments and changes in intergovernmental relationships. The findings of this study are compared with the results of investigating the impact of political events on foreign direct investments by United States and German multinational firms. Similarities and differences are highlighted as well as their probable causes. As such, this study makes a contribution to the conceptualization of political risk in an international business context.

The effect of political events on Japanese foreign direct investments

Business corporations need to engage in external relations (ER) because society must be continuously convinced to give and maintain its support of this man-made and socially tolerated instrument for organizing economic activity and to stop short of unduly restraining it. Society here refers to the more or less organized and powerful institutions and interest groups that can assist or hamper business in its economic role. Government is usually the most relevant "external" institution but it is more or less influenced by interest groups and by the more amorphous general public. These various collectivities constitute the "nonmarket" and "macro-managerial" environments of business, which are distinct from the relatively free "markets" for the firm's inputs and outputs, and from its internal "micromanagement." Hence, external relations (ER) is that function

Jacks N. Behrman

Papers

U.S. international business and governments