Domestic Political Connections and International Expansion: It’s not Only ‘Who You Know’ That Matters

Mauro Guillén, Management Department, The Wharton School; Esteban García-Canal, Universidad de Oviedo; and Laura Fernández‐Méndez, Universidad Pontificia Comillas

Journal of World Business, Volume 53, Issue 5, November 2018

Abstract: Former politicians on the board of directors bring to the firm domestic political connections and political knowledge. Previous research has mainly highlighted the role of contacts, without fully recognizing the role of political knowledge accumulated at home. By focusing on the effect of domestic political connections on foreign direct investment, we show that domestic political knowledge also shapes foreign expansion. We argue that contacts provided by former politicians may not be useful for foreign expansion whilst their political knowledge can be of help in countries with discretionary governments and with similar institutional environments to the one of the home country.

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