Intergroup Biases in Assessing Political Risk: The Role of National Identity

Abstract

Geopolitics are back as a subject of inquiry in international business and have increased the threat of political risk for MNEs and domestic firms globally. However, firms may struggle to assess political risk accurately due to the social identity processes within top management teams that influence information seeking and processing. This article offers a brief introduction to an intergroup bias which can harm political risk assessments, namely managers filtering risk through a national identity lens. Focusing on the consequences of identity bias, we suggest ways in which political risk assessment may be made more effective for managers – and accurate.