The risk is in the relationship, not the country : politics and mining in Kazakhstan

Abstract

How do we account for foreign firms that are successful in politically “risky” countries? While traditional political risk indices may tell us why a country is considered a difficult operating environment, they tell us very little about why some foreign firms are nevertheless able to operate successfully in such countries over long periods of time. In fact, risk indices by their very nature make “success” almost impossible to capture due to their sole focus on “host country” behavior. Rather, as this thesis argues, the political risk is in the relationship between the firm and a series of stakeholders within a given country, not the country itself. This is a thesis of deviant cases: it holds the “successful relationship” between a foreign firm and its stakeholders as the constant dependent variable in the “significantly risky” country of Kazakhstan. Success is defined as the ability of each actor to pursue its own goals to a self-satisfactory degree, with the resources an actor mobilizes to achieve those goals and the constraints that restrict those resources as the independent variables. Three self-contained cases of “successful” foreign mining firms operating in Kazakhstan are analyzed here to determine the distinct causal pathways that led each firm to seeming “success”; the thesis then pivots to a between-subjects examination aimed at drawing out the common themes among the three different foreign firms. Within international relations theory, the relationship between the foreign firm and its stakeholders is considered here as a window into the intersection of the international political economy and the domestic political economy of a country in transition, but critically, allotting agents and structures equal ontological status. Thus the ultimate aim of this investigation is to enrich our understanding of social behavior – here, co-existence – within the context of the agent- structure debate in larger social scientific inquiry.