Non-predictive strategies for political risk management in international markets

Abstract

Purpose – This study aims to examine how Global South firms mitigate political risk when operating in armed conflict zones and politically unstable international markets. It addresses the limited understanding of how firms develop, mobilize and transfer institutional capabilities in highly unstable contexts, where traditional predictive approaches lose effectiveness. Specifically, it investigates how Brazilian firms mobilize immediate resources, relational networks and trust to transform uncertainty into opportunity, uncovering patterns of resilience, adaptability and organizational learning underexplored in the literature on the
internationalization of Global South multinational enterprises.
Design/methodology/approach – This study adopts a qualitative, multiple-case design grounded in an inductive approach, examining six Brazilian firms with operations in, or exposure to, conflict-affected or politically unstable environments. Primary data comprised seven semistructured interviews conducted between February and March 2023, complemented by documentary evidence including corporate documents, media coverage, export data and institutional reports. Data were analyzed through iterative open coding, second-order theming and crosscase pattern matching, with documentary triangulation enhancing construct validity.
Findings – The findings highlight the central role of strategic partnerships in managing financial exposure, enabling market entry and navigating political uncertainty. Firms rarely rely on formal predictive models; instead, they combine commercial safeguards, trusted relationships, effectual reasoning and adaptive responses. Concrete mechanisms include trust-based distributor networks, advance-payment safeguards, institutional bricolage and rapid reconfiguration routines, alongside effectuation heuristics such as bird-in-hand and affordable loss. Networks function as relational infrastructure, providing critical information, local resources and logistical support that strengthen organizational resilience and enable firms to convert political shocks into opportunities.
Research limitations/implications – The small case sample limits generalizability, calling for comparative studies across Global South regions and sectors and for investigating whether the findings extend to multinationals from developed economies. The durability and scalability of effectuation-based responses warrant longitudinal and mixed-method research, including whether non-predictive routines become institutionalized over time and the development of measures linking effectual reasoning to firm performance under political shocks. 
Practical implications – Managers of emerging multinationals and smaller exporters in fragile markets should cultivate diverse partnerships and strengthen local intermediaries, which provide legitimacy, market intelligence and operational capacity beyond what predictive models offer. Acceptable-loss rules, implemented through contractual clauses, payment safeguards or staged investments, preserve strategic flexibility and limit downside exposure, while rapid relocation routines and logistics reconfiguration enhance agility. Public policy and multilateral agencies can support these efforts through risk-mitigation instruments, internationalization programs and stronger intermediary networks.
Social implications – By showing how firms sustain operations in conflict-affected and institutionally fragile regions, the study illuminates how continued trade and investment can preserve access to essential goods, employment and local economic activity in underserved markets often abandoned by established competitors. Cases such as engagement with international institutions to improve trade facilitation and participation in humanitarian reconstruction suggest that resilient Global South firms can contribute to post-crisis recovery. Strengthening intermediary networks and risk-mitigation instruments, as recommended to policymakers and multilateral agencies, may foster more stable trade links and reduce the economic isolation of politically unstable regions.
Originality/value – By specifying the microfoundations of non-predictive strategy, this study extends effectuation theory to political-risk settings and advances debates on the interplay among effectuation, resilience and institutions in Global South internationalization. It shows that political risk management depends less on prediction than on transforming embedded relationships into adaptive action, offering value to researchers of emerging-market multinationals and to managers sustaining international operations in volatile environments.