The Advantage of Outsiderness: Political Risk Management in Historical Perspective

Many of the contemporary challenges that signal the tail-­‐end of globalization have historical predecessors. In particular, the interwar period was characterized by strong deglobalization tendencies, as conflicts between developed
nations rose, anti-­‐colonial and communist movements gained ground, and international monetary instability increased. Based on the historical case of German multinationals in colonial India, this paper explores how MNEs
responded to deglobalization by developing political strategies and cultivating capabilities that allowed them to successfully pursue international markets in geopolitically turbulent times. Identifying their mechanisms through historical sources and viewing them longitudinally shows MNEs as political actors, not just adapting and dealing with novel political contexts but actively shaping political identities and processes of legitimization. The results suggest a conceptual rethink of political risk, seeing it (i) as a source of opportunities that multinationals can capitalize on and (ii) in relative terms, with MNEs being judged by their contribution relative to other foreign MNEs.