ABSTRACT
This study aims to investigate the effect of geopolitical stakes of G7, BRICS and ASEAN cooperation on firm value of Multinational Corporations (MNCs), as well as to identify geopolitical factors contributing to global influence in international segmentation decisions. We focus on MNCs in Malaysia that were active from 2009 to 2013. We used a factor analysis to capture the underlying geopolitical determinants of G7, BRICS, and ASEAN cooperation and propose a geopolitical benchmark as a new approach to measure the excess value of MNCs. Results reveal that geopolitical stakes of G7, BRICS, and ASEAN cooperation are highly correlated with the value of MNCs in Malaysia. The power of institutional geopolitics, namely, military, material, and social power, influences firm value negatively. Thus, it is important for the top management of the MNCs to understand the changes of host countries’ geopolitical stakes in order to formulate their market value strategies and firm location choice.
