Uncertainty, fictional expectations and economic agency

Abstract

Major periods of regulatory, institutional and economic upheaval can have significant impacts on firms. They have to mediate resulting uncertainties, but where such actions are geographically uneven as firms respond in different ways. Actors construct mental representations of a future reality based on existing understandings of a situation, which seeks to influence and guide other actors, termed ‘fictional expectations’ (Beckert, 2016). These issues are important for foreign owned subsidiaries, since they work through intracorporate processes and politics, global production networks, and host regions. The UK’s decision to leave the EU in June 2016 produced significant uncertainties around the final type of trading agreement. This paper examines how foreign subsidiaries in the Southeast of England and Wales mediated these uncertainties, and why particular fictional expectations were created in relation to the corporate contexts of subsidiaries and the nature of regional ‘coupling’. In conclusion, the paper finds that subsidiaries created fictional expectations to acquire devolved responsibility from HQs for mediating Brexit, and to address uncertainties relating to a potential ‘no deal’ and supplier issues. High value creation subsidiaries have greater autonomy and capabilities that facilitate fictional expectations that are able to acquire responsibility for Brexit mediation, and to undertake more substantive uncertainty reduction measures.