ABSTRACT
Ideally, states provide security for doing business by a legal-institutional framework enterprises can rely on. State institutions work in a legal-rational, predictable and effective manner. Relations between officials and private actors are formal and impersonal. In the OECD-area, this is a constellation often taken for granted. In many countries worldwide, however, the reality looks different. Private actors seize public institutions and processes to realise their particularistic interests of accumulating power and private wealth. For this purpose, they systematically “abuse, side-step, ignore or even tailor” formal institutions to their own needs in order to accumulate power and ever more wealth (Amundsen, 1999, p. 3). Such forms of “state capture” are associated with weak state institutions, legal uncertainty, rampant corruption and the detrimental behaviour of ruling elites, fostering their own business interests (“favouritism”) while harming independent enterprises. These are specific political risks international businesses are confronted with when operating in affected countries. Political risks comprise any occurrence in the international business context where public actions or non-state actors that are active in the host country of the international activities interfere with private international businesses and adversely impact the performance of the international operation. The results are a wide set of negative effects on businesses, ranging from opportunity losses to the total seizure of corporate assets in the worst case. This is the constellation this book focuses on. The first two chapters introduce political risk factors characteristic for state capture and discuss them in view of the current Political Science and International Business literature. Besides this theoretical perspective, the volume also offers empirical evidence, shedding light on state capture and international business in nine Black Sea Region countries. It additionally comprises three company case studies, depicting experiences made in this regard.
