politcal risk in jordanian international firms

7/30/2019 Politcal Risk in Jordanian International Firms

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Political Risk Assessment in Jordanian

International Firms

Political Risk Assessment in JordanianInternational Firms


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Introduction

Political Risk studies mostly focused on developed

countries to date

Jordan earlier studies of the business environment

Jordan the context


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Political Risk Assessment

Political risk is a key risk for international businesses

PRA the process of analysing and evaluating political

risk while undertaking IB activities PRA tools and techniques can be deployed qualitative

and quantitative


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Qualitative Tools and Techniques

Judgement and intuition of managers

Scenario development

Expert opinion

Standardised checklist

Delphi


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Quantitative Tools and Techniques

Earlier studies have shown to be ineffective in some

contexts

Earlier studies in developed economies have shown thatqualitative techniques are more commonly used than

quantitative ones


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Methodology

The sample Jordanian Shareholding Corporations

Amman Stock Exchange

Measures of internationalisation

General Managers

Self report questionnaire, April to June 2009

65 out of 98 responses (65.3%)

Use and effectiveness of techniques


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Methodology

Semi- structured interviews with eight companies to

investigate why questions

Classification by size and internationalisation ( atrichotomous method)


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Classification of a corporations size by

total assets( US$)

Small 19.2

Medium 19.3 - 41.3

Large 41.4

Number of MNCs21 20 23


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Classification of Jordanian MNCs bydegree of internationalisation

Indicators of internationalisationDegree ofinternationalisationLowMediumHighNumber of

years in international business 10 years11 25years 26 yearsNumber ofMNCs321715Revenue generated byinternational business activities 10.0 %11.0 % -25.0 % 26.0 %Number of

MNCs252811Number of countries in which acorporation operates 56 - 10 11Number ofMNCs351613


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Assessment techniques:UseSuccess aN%ValidNN%Valid NJudgement ofmanager3656.2643046.864Expertopinion2640.6642234.364Scenariodevelopment1422.2631422.263Quantitativetechniques69.36423.164Standardisedchecklist57.86446.262Delphitechnique46.26223.164Table 4: Use and success of

political risk assessment techniques Notice a: Percentage of MNCs that score 2 used withmoderate success and 3 used with a great deal ofsuccess; details add up to more than 100 percentbecause of duplicate responses.


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Why Qualitative rather than

Quantitative?

Speed of use

Less expensive data requirements and analysis

(Lack of) availability of data

Unreliability of politically sensitive data due to censorship


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Conclusions and Implications

Similar results elsewhere in the Middle East and other

emerging markets?

International businesses wherever based- should usequalitative techniques in a number of emerging markets

However this does not imply that one set of techniques

has greater merit than the other

politcal risk in jordanian international firms

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