Geopolitics and its Impacts on International Business Decisions: A Framework for a Geopolitical Paradigm of International Business

ABSTRACT Geopolitical elements constitute an important component of the external environment affecting international business operations. Together with other environmental variables, they are likely to influence a firm’s decisions on its future or existing international business activities. However, there are few studies highlighting the geopolitical milieu that affects the international business domain. A framework for a geopolitical paradigm of international business is introduced with a particular focus on the time, place and demographical dimensions of geopolitics. Key words: geopolitics, globalisation, framework

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INTRODUCTION While much emphasised in the literature on international politics (Brucan, 1978; Dougherty & Pfaltzgraff, 1990; Reynolds, 1980), the term ‘geopolitics’ is used sporadically, however, by the economic historians to explain international economic relations (e.g. Gordon, A., 1993; Gordon, S., 1993; Quraishi, 1996). In the international business literature specifically, Dunning (1977; 1979; 1986; 1988; 1995; 1998) for example, in explaining the location of international production, has mentioned a number of the political and geographic tenets as country-specific determinants of location-specific advantages. However, it seems that he did not consider these sufficiently significant to overly influence the structure of international production. In addition, he has given little emphasis to the changes that take place in the international political as well as economic orders, e.g., the impact of the Cold War and the implications of colonial legacies that influence international business dynamics. However, in international business, geopolitical variables are important considerations for companies when deciding on the modus operandi for their foreign investment (As-Saber et al., 1999). This paper does not