Global Journal of Commerce & Management Perspective
Open Access

Abstract

The Impact of Political Risk on the Location Decisions of Multinational Corporations: A Zimbabwean Perspective

Wilford Mawanza,Nathan Mugumisi and Atanas Sixpence

The purpose of the research was to determine the impact of political risk on the location decisions of multinational corporations (MNCs) on a Zimbabwean perspective, and to show strategies by management of MNCs to deal with the effects of political risk to their operation in high political risk nations like Zimbabwe. The study was done through a survey on perceptions of decision makers of MNCs operating in Zimbabwean. It was found out that corporations were concerned about breach of contract, non-honouring of government guarantees and adverse regulatory changes which can result in investment loss than outright expropriation. Multinational corporations consider the political risk of the host country as one of the most important determinants in investment decision making and that the quality of a host country’s investment environment especially the political situation is very important in attracting Foreign Direct Investment (FDI).