Political Schemas and Corporate Political Activities During Foreign Market Entry: A Micro-process Perspective

The paper analyses how multinational enterprises (MNEs) manage their interactions with host governments during the market entry process. A qualitative multiple case study collected data through in-depth interviews with multiple participants in six New Zealand MNEs. The analysis identifies two distinct political schemas which represent MNE managers’ assumptions and heuristics regarding how to approach interactions with foreign governments, systematic and episodic, which lead to the enactment of distinct patterns of political activities, each supported by certain political resources and capabilities. We then identify several sources of the variations in these two political schemas at the managerial, firm, industry, and country levels of analysis. Our study deepens understanding of the micro-processes of corporate political activity (CPA) and the processes and activities through which political resources and capabilities are developed, deployed and leveraged by MNE actors in managing their interactions with host governments during the market entry process. In doing so, we highlight the role of international experience in influencing the process of political capability development, and also the role of managerial actions in shaping this evolutionary process.