Making Sense of Socio-Political Risks in International Business: A Configurational Approach to Embracing Complexity

Abstract

As social and political contexts have become major sources of uncertainty for international business, we have witnessed renewed efforts to study the impact of socio-political risks on multinational enterprises. However, predominant methods in the field of international business are, for the most part, limited in their capacity to directly address the complexity intrinsic to socio-political risks. We propose overcoming this limitation by adopting a configurational approach that enables researchers to embrace the complexity of socio-political risks in international business. We explain the fundamental principles of a configurational approach and the typical stages for using its methodological tool, Qualitative Comparative Analysis (QCA). We then outline how scholars can use QCA to pursue future research avenues that identify the configurations of conditions that constitute socio-political risks or the effects of socio-political risks on diverse outcomes of interest. We also clarify how the international business field can benefit from the use of QCA in the study of socio-political risks by advancing knowledge of international business in emerging and informal markets, where data access is limited. These efforts aim to motivate international business and management scholars to broaden their empirical toolbox for the study of socio-political risks by engaging in configurational thinking and theorizing.