Political Risk Assessment and Foreign Investment of Multinational Hotel Firms

Foreign investment is viewed as a major stimulus to economic growth in developing countries. The significant role of the political dimension of the environment in the foreign investment decision has been clearly shown in previous studies. Political risk is shown to be an inescapable reality in foreign market entry decision since assessing the risk of overseas becomes a crucial aspect of strategic decision making. This paper presents different definitions of political risks, illustrates the relationship between political risk and foreign investment decision by multinational hotel firms. It also discusses the different approaches used in theoretical frameworks of political risk and reviews the difficulties and problems found in political risk assessment techniques. The study concludes with the role of political risk in multinational hotel business decision and importance of political risk for host country and suggests several recommendations to both academics and practitioners for further research.