A Theoretical Perspective on Political Risk

Abstract

One of the fastest growing areas of research in international business has been political risk assessment. Concerned primarily with the identification, analysis, and management of sociopolitical and governmental restraints on foreign investment, the discipline has flourished in the wake of the international turmoil of recent years. An integral stage in the development of any new field is the establishment of a theoretical base upon which further research can build. This paper thus addresses itself to theoretical and conceptual issues in political risk assessment, focusing on the interrelationship of strategies, goals, and capabilities of key actors, as well as the impact of different environments on the formation of political risk. In order to demonstrate the feasibility of the approach set forth in this paper, political risk in the Republic of South Africa is examined.