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Surviving populism: A corporate political activity approach in Mexico

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Abstract

Populism is on the rise globally, and this is a type of macroeconomic risk that affects strategies of MNEs. There is a growing need to investigate how particular populist leaders shape the environment where companies operate, and how firms respond to it. We examine the non-market strategies that MNEs in Mexico deploy towards canceling previous administration mega projects and supporting projects of the new populist regime. We find that companies in Mexico become politically involved with Mexico’s government in an iterative way to obtain favorable business outcomes. Companies elude direct engagement with the government but actively adapt to institutional pressures by implementing partnership strategies to build political capital and investing in social projects that benefit the country's social image to gain legitimacy. By deploying social investments as part of their non-market strategies, firms have better chances of mitigating institutional volatility and adapting and influencing the host country's new business projects. Our findings suggest that in unstable institutional contexts, cultivation of the new political connections between MNEs and current administrations can serve as a useful tool in mitigating political risk for both sides. Investing in the new administrations’ social projects is a tool that helps companies mitigate institutional volatility, reduce transaction costs, and gain a closer relationship between the private and public sectors.

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  1. Graduate School of Management at Saint-Petersburg State University, Volkhovsky Lane, 3, Saint-Petersburg, 199004, Russia

    Andrei Panibratov, Ramsés A. Sánchez Herrera, Alvar Castello Esquerdo & Daria Klishevich

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  1. Andrei Panibratov
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Panibratov, A., Herrera, R.A.S., Esquerdo, A.C. et al. Surviving populism: A corporate political activity approach in Mexico. J Int Bus Policy 6, 182–200 (2023). https://doi.org/10.1057/s42214-022-00140-1

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