A network view of MNC embeddedness in a politically uncertain market: the case of Turkey

Abstract

Emerging markets are rapidly gaining importance in the world economy and many multinational corporations (MNCs) are taking advantage of this economic development by expanding their activities there. Due to the high level of perceived uncertainty and lack of formal institutions in these markets, firms cope by relying on network relationships with other organizational actors – including societal and political actors – in their environment. In these uncertain environments, where political and economic change is frequent, firms may have to negotiate their relationships frequently – building new ties and severing old ones. In this paper, findings from a case study of Turkey reveal that while the role of political actors in emerging markets should not be neglected, the value of political ties are contingent on the market environment and can change in the face of state policy change. Hence, MNCs tend to buffer the political hazards through their connections to the business and civil society organizations. Consequently, we suggest that researchers in this field might improve the explanatory power of their models by including consideration of the context that firms are embedded in. Then the focus needs to be shifted towards the interplay between different actors and the indirect impact of network ties along with the direct effects.