Recent trends show a global resurgence in industrial policy, where state power promotes specific industries, substantially impacting international market dynamics as a nonmarket force. Our analysis centers on industrial policies to enable home-country firms to participate in international economic activities and views firm nonmarket strategies as an important driver. Through a history-to-theory approach and microhistorical analysis, we examine Finnish shipbuilders’ nonmarket strategies to leverage industrial policy for competing internationally (1946-2000). Drawing from New Institutional Economics, we view outward-oriented industrial policy measures as additional country-level institutions that shape and alter cross-border transaction costs within international markets to benefit firms from the implementing country. We uncover the mechanisms and adaptation of industrial policy institutions, identifying nonmarket efforts termed ‘manufacturing national consent’ as crucial driver to policy implementation. We propose a theoretical model detailing the structural conditions conducive to industrial policy development, the role of nonmarket strategies, and their impacts on international competitive advantages. Overall, our aim is to rekindle a more nuanced discussion on industrial policy within the IB community and showcase the potential of historical research in our field.

The rise of populism affects more than a quarter of the world's population and has substantial impact on international business (IB) and multinational enterprises (MNEs). Our study analyzes how home-country populism affects MNE internationalization, raising significant theoretical implications for both MNE (market and non-market) strategy and IB policy literature. Examining data from over 20,000 MNEs across 44 countries in the period between 2013 and 2022, we investigate how different types of populism, especially from right-wing centered parties, influences MNEs’ internationalization patterns. We further also distinguish between different types of internationalization behaviours – both in terms of exporting vs. outward foreign direct investments (OFDIs) and in terms of greenfield vs. acquisition projects under the OFDI umbrella. Drawing on institutional theory and social identity theory, our study adds to the recent calls for greater theoretical scrutiny of political risks and their mechanisms, especially populism. We add theoretical nuance to still limited understanding of why and how populism impacts specific MNE internationalization patterns. Our study distinguishes between center, left- and right-wing types of populism. We have found a surprising result – the expected negative impact of populism on greenfield investments actually weakens under right-wing populist regimes.

Conventional partisan political risk theories in international business assume that host-country governments led by right-wing parties pose less risk to foreign and domestic investors. We challenge that convention by developing a framework adding populist political risk assumptions emphasizing anti-foreign investor policy priorities. That addition prompts a “right-wing shift” increasing risk for foreign relative to domestic investors. We document support for this theorized shift through capital structure analyses of 596 investment projects announced for construction and operation in 27 European countries from 1990-2020. Projects involving foreign or domestic investing project “sponsors” are financed with less equity indicative of less investment risk when announced in host countries with governments led by right-wing parties. When recent elections see increased vote shares for right-wing populist parties, follow-on projects involving only domestic sponsors again include less equity indicative of lower investment risk, but projects involving at least one foreign sponsor include more equity indicative of higher investment risk. We contribute novel theory and evidence about populist party influence on government policies affecting investment risk. Theoretically, we identify important boundary conditions for populist party influence related to partisan orientation. Empirically, we identify alternative methods for assessing populist party influence related to recent electoral outcomes.