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Information or influence? The benefits of experience for managing political uncertainty

University of Pennsylvania, USA, henisz{at}wharton.upenn.edu

Andrew Delios

National University of Singapore, Singapore, andrew{at}nus.edu.sg

We examine the extent to which two sources of uncertainty over the future policy environment - political hazards and regime change - influence foreign-owned subsidiary exit rates. We find that prior exits by peer firms enhance exit rates, particularly when political hazards are high. We also find that a multinational firm’s own experience under the current political regime has a moderating influence on subsidiary exit rates in the presence of political hazards, but it enhances exit rates after a change in the political regime. These findings support the argument that in contrast to the informational benefit conferred by prior peer firms’ exits, own firm experience proxies for actual or perceived influence in a nation’s policy-making process.

Key Words: environmental uncertainty • experience • multinational • political risk • survival

Strategic Organization, Vol. 2, No. 4, 389-421 (2004)
DOI: 10.1177/1476127004047619


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