Abstract
This chapter offers a discussion of the ideas proposed by Weiner (Journal of International Business Studies 36:576–587, 2005) in his paper titled “Speculation in international crises: report from the Gulf”, where in the author addresses issues critical to financial trading in regard to oil, national security policy, and the outcomes of crises, such as greater market volatility. Integrating concepts of political risk and global closure with risk management and financial trading over history, the chapter discusses four timeless lessons which can be gleaned from the original paper: (1) crises, which are inevitable and repetitive, may occur without adequate risk-management tools; (2) blame may be apportioned without fundamental analysis, which likely leads to (3) incomplete, inadequate and often off-target policy responses, all of which implicitly require (4) well-structured non-market strategies that consider both potential crises and inherent asymmetric information sets. The chapter also discusses how technology developments in international business, financial trading and risk management dynamically change over time, enabling some MNEs to leverage experience to manage crises and disruptions while others fail to learn from history and experience.
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Notes
- 1.
Yergin (1992: 129–133) provides a fascinating vignette into how oil MNEs weighed market and non-market strategies in the aftermath of the revolutionary Baku oil riots in 1905. Yergin argues this was “the first time… a violent upheaval had interrupted the flow of oil, threatening to make a vast investment worthless.” Paris-based Rothschilds decided to lower their Russia-concentrated oil interests; whereas Royal Dutch/Shell, seeking to diversify supplies, paid in stock for the Baku assets. The Rothschilds became the largest shareholders of both Shell and Royal Dutch stock, considerably diversifying away from Russian oil assets into a global oil company, while Royal Dutch/Shell diversified their oil assets by adding Baku to their portfolio. Both sides weighed the political risks of the developing Russia revolutionary movements against their respective needs for oil assets, coming to this agreement in 1912.
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Selmier, W.T., Oh, C.H. (2022). Global Closure, Crises and Financial Markets: A Commentary. In: Mithani, M.A., Narula, R., Surdu, I., Verbeke, A. (eds) Crises and Disruptions in International Business. JIBS Special Collections. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-80383-4_3
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