The institutionalisation of political risk assessment (IPRA) in Jordanian international firms

This paper investigates the determinants of the institutionalisation of political risk assessment (IPRA) within publicly traded international firms in Jordan. The aim is to contribute to the development of IPRA theory by identifying indicators of institutionalisation; by describing and explaining their determinants; and by investigating their relative importance. The paper also represents one of the first studies of political risk assessment of firms in a Middle East context.

The study focuses on firm-specific characteristics and extends previous research by investigating firms’ size and degree of internationalisation. A survey strategy was adopted and self-administered questionnaires were distributed to the entire target population of Jordanian international firms. 44 usable responses were obtained (54.9%). Non-parametric statistics were used to test the research hypotheses.

The main findings are that the level of institutionalisation of political risk assessment (PRA) within firms is significantly and positively correlated with a firm's total assets, international revenue and number of operating countries. Of the three significant determinants of institutionalisation, the number of operating countries is found to be the most important. The more countries in which a firm operates, the more likely it is to face significant risks, and so to institutionalise political risk assessment.