Geopolitical jockeying: Economic nationalism and multinational strategy in historical perspective

• Author: Christina Lubinski,R. Daniel Wadhwani
• Published date: 01 March 2020
• Date: 01 March 2020
• DOI: http://doi.org/10.1002/smj.3022

SPECIAL ISSUE ARTICLE

Geopolitical jockeying: Economic nationalism and

multinational strategy in historical perspective

†*

Christina Lubinski

1,2

| R. Daniel Wadhwani

3

1

Centre for Business History, Department of

Management, Politics and Philosophy,

Copenhagen Business School, Frederiksberg,

Denmark

2

Lloyd Greif Center for Entrepreneurial Studies,

Marshall School of Business, University of

Southern California, Los Angeles, California

3

Eberhardt School of Business, University of the

Pacific, Los Angeles, California

Correspondence

R. Daniel Wadhwani, University of the Pacific,

3601 Pacific Avenue, Stockton, CA 95211.

Email: dwadhwani@pacific.edu

Research Summary:We explore multinational strategy

formation in the context of rising economic nationalism.

Specifically, we examine how firms develop strategies to

capitalize on the historical and aspirational attributes of

national identity. Analyzing the histories of two German

multinationals in late colonial India, we find that these firms

engaged in “geopolitical jockeying”to delegitimize rival

multinationals and position themselves as complementary to

the economic and political goals of the host nation. Toward

thatendtheyemployed“aspirational political practices,”

addressingthe inherently future-oriented character of nation-

alism, and invested in the development of political capabili-

ties to gather information and shape perceptions of national

contexts. The paper contributes to a more robust conceptual-

ization of nations and nationalism and their role in the for-

mation of international competition and strategy.

Managerial Summary:Rising economic nationalism can

create political and economic opportunities as well as

threats for multinational firms. Through a historical analy-

sis of the emerging strategy of two German companies—

Siemens and Bayer—in late colonial India, we show how

firms can engage in “geopolitical jockeying”to delegitimize

rival multinationals and position themselves as complemen-

tary to the economic and political goals of host nations. To

do so the companies engaged in “aspirational political

practices,”addressing the inherently future or goal-oriented

aspects of nations, and created political capabilities designed

to both gather intelligence on and shape the nationalist

movements.The paper uses history as a mirror for reflecting

on the causes and consequences of economic nationalism

for international strategy in our own time.

†

This article is dedicated to the memory of Kishin V. Wadhwani (1925-2019).

*The authors contributed equally.

Received: 1 October 2017 Revised: 31 December 2018 Accepted: 1 February 2019 Published on: 15 April 2019

DOI: 10.1002/smj.3022

400 © 2019 John Wiley & Sons, Ltd. wileyonlinelibrary.com/journal/smj Strat Mgmt J. 2020;41:400–421.

KEYWORDS

history, international strategy, multinational strategy,

nationalism, nonmarket strategy, political capabilities

1|INTRODUCTION

Research on multinational strategy has clearly recognized that international business does not operate

in a frictionless, globalized world. Early theories of multinational enterprise (MNEs) focused on how

firms achieved competitive advantages abroad based on the economics of ownership and location

advantages (Dunning, 1977; Hymer, 1976), with relatively less analytical attention to the political

contexts of home and host countries. More recent approaches have theorized extensively about how

the relationship between specific home and host countries shapes the risks and opportunities MNEs

face in going abroad (Ghemawat, 2007, 2017). Institutional and legitimacy theories, in particular,

have emphasized strategy formation within the political contexts in which MNEs operate (Henisz &

Zelner, 2012; Kostova & Zaheer, 1999; Luo, 2004; Marquis & Raynard, 2015; Stevens, Xie, & Peng,

2016).

Yet, despite the growing recognition of the importance of political context in multinational strat-

egy, research has only started to grapple more deeply with one of the most important sources of polit-

ical legitimacy: economic nationalism (Abdelal, 2001; Jakobsen & Jakobsen, 2011). Both historically

and today, economic nationalism has been a particularly important source of political risks but also

of political opportunities for multinationals. While strategy and international business scholars have

recognized the importance of nations and nationalism in their accounts of the context for international

business (Ghemawat, 2007; Vernon, 1998; Wells & Ahmad, 2007), little analytical attention has been

devoted to the aspirational (Abdelal, 2001) and historical (Breuilly, 2013) characteristics of nations

as “imagined communities”(Anderson, 1983). The relative neglect of national identity, and the idea-

tional aspects of nationalism and nationhood limits our ability to grasp its role in multinational strat-

egy formation.

In this paper, we address this gap by exploring how integrating the aspirational and historical

characteristics of nations might contribute to our understanding of multinational strategy formation.

Using the historical cases of two German multinationals—the electrical company Siemens and the

chemical firm Bayer (since 1925, part of I.G. Farben)—in late colonial India, we explore how these

multinationals dealt with the rise of Indian nationalism. We find that nationalism presented German

MNEs with strategic opportunities as well as risks. Over the decades between World War I and

World War II, the German companies learned to capitalize on rising nationalism in the Subcontinent

using an emerging strategy of positioning themselves as “outsiders”to colonialism, and hence as a

politically legitimate alternative to rival MNEs from the UK. Bayer and Siemens came to do so by

presenting their aims and actions as complementary to the aspirations of nationalist leaders. They

engaged in practices, such as partnerships with nationalists and educational programs for Indians,

which worked to cultivate the trust of Indian nationalists and to delegitimize their British rivals. And,

they increasingly invested in the ability to gather both home and host country political information

and engage in communication designed to maintain that political advantage in the Subcontinent. By

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