A Study of how Organisational Culture and Experience Affect Firms’ Political Risk Identification: A Case Study of Ericsson, Motorola Solutions, Tecnotree and KVH Industries

Abstract: The end of the Cold War marked the end of a dual world power system and an opening up of world markets. This has resulted in a more complex risk landscape, complicating political risks that firms face abroad. The 1990s and onwards also marked an increase in global interconnectedness, increasing companies’ exposure to political risks. Political risk identification has therefore become important component to incorporate into overall risk assessments when operating abroad. This paper argues that a company’s exposure to political risk is dependent on temporal aspects and the type of sector it is operating in. By isolating these aspects, this paper assesses how organisational culture and experience affect how four telecommunication firms - Ericsson, Motorola Solutions, Tecnotree and KVH - identify political risk. The overall purpose of this paper is therefore to assess how organisational culture and experience affect political risk identification. A framework for analysis is developed from existing literature specifying various sub-variables within organisational culture and experience. The thesis finds that organisational culture affects political risk identification. However, this effect differs depending on the type of organisational culture. Scandinavian organisational cultures make firms better equipped at identifying emerging political risks whilst American organisational cultures make firms more capable at identifying current political risks. The thesis also finds that experience affects political risk identification with mature firms with experiential market-specific knowledge being more proficient at identifying political risk. Finally, analysis finds a link between organisational culture and experience and their effect on political risk identification. It finds that the ability to incorporate experiences is dependent on organisational culture with Scandinavian organisational cultures making firms better at incorporating learned experiences to improve political risk identification. Keywords: political risk, organisational culture, experience, political risk identification, risk management, Ericsson, Motorola, Tecnotree, KVH Industries