The Influence Of Foreign Political Connections In Foreign Companies

Introduction

This article is based on the former politicians that many firms appoints politicians on the board of directors for external expansion. They assumed that political national knowledge is very helpful for the external expansion. They provide political information and contacts to the company or organisations but it is the point of discussion that political contacts are not useful for the foreign expansion. It is seemed to an interesting phenomena that they help out the firm as the monitoring the management of the company. Local representatives bring the material and contacts that may enhance the progress and expertise of the firm, they also provide capitals in the form of human and societal capital. It is observed in previous researches that appointment of representatives on board helps to secure these contacts with government. Appointing politicians are beneficial in two ways, once they provide improved relations with administration, the other is they bring useful knowledge for guidance to take better decisions for the firm. All these perspectives are useful when business on the domestic level, all contacts and knowledge can b helpful. When business transformed through national to international expansion, it is necessary to analyze these benefits separately. Whereas political knowledge transferred across countries in the form of party-political capabilities, the former representatives have no experience and contact. They can only be exploited on the places where they are located. This article intends to explain the influences of domestic former politicians on the foreign expansions.

Need and Significance

The domestic politicians appointed as a board of directors measured beneficial for the outcomes of the company in two ways. As they provide advises to the managers and secondly facilitate to strong relationship with external agent. National politicians have interpersonal skills and can easily be established channels of communication with external institutions. That’s why it is expected that the appointment of former politicians is promoted to the local expansion somewhat foreign expansion. They provide human or social capital but social capital provide limited benefits. As social capital is country specific, Only the world-wide contacts of politicians would be help but national politicians have only national contacts in specific countries. There is need to study the other that put attention towards the role of party-political connections when it comes to the foreign expansion of the organization. Domestic representatives increase the opportunity to invest in the home country but these are not helpful for the firms to grow abroad. There are many researchers who study on the domestic legislators in what perspectives are beneficial for external expansion. It is expected that domestic politicians have negative inspiration on external expansion but te knowledge and contacts providing by them are very helpful. The social capital theory that is given by (Coleman 1988) analyze the influence that these contacts might have on external growth. The knowledge-based view is given by (Kogut and Zander in 1992, 1993). Peng given us the institution based view to analyze the effect of political information to the international expansion of the firm. Higher politicians like prime minister are included in the research but former politicians are taken as sample. It means higher politicians are considered more international experienced.

Conclusion and Recommendation

Our research provides proof of the impact of foreign political relations in foreign companies. We have two different interpretations of the influence of the national politicians on the worldwide expansion of the Board of Directors. The first theory based on the principle of social capital (Colombian, 1988), predicted that this effect will be more and more for companies with older world-wide knowledge with relevant international experience. The focus on the political knowledge provided by the old representatives is based on the structure, (Kogut and Zander, 1992, 1993) and the institution-based approach by (Peng ET Almighty, 2009. Peng, 2002). ). We hope that the presence of politicians in board will encourage national development due to politicians, they do not allow the expansion of business abroad. In their home country, companies can benefit from their connection with former representatives and their governments and regulators. The politician inside the company helps make the most of their awareness and make the maximum. One of the key aspects can be understood by the fact that many countries around the world are limited, but the authors restrict investigations in just a Spanish country.