The “costs of doing business abroad” in a cross-border context characterised by extreme political volatility

Abstract

Purpose The purpose of this study is to describe and explain the organisation design antecedents of coordination, learning and trust in an international strategic alliance in a cross-border context characterised by extreme political volatility. Design/methodology/approach The research was carried out as a single-case study in situ in a humanitarian international strategic alliance in Pyongyang, the Democratic People’s Republic of Korea (North Korea). Findings In addition to explaining the effects of interface, specialisation, formalisation and centralisation on coordination, learning and trust, the study demonstrates the influence of classic international business (IB) “costs of doing business abroad” (Hymer, 1960/1976) on the same organisational outcomes. Moreover, the study identifies intergovernmental engagement/containment/disengagement as a contextual antecedent of both organisation design and outcomes. Originality/value The study extends IB theory by indicating that mainstream IB perspectives may not fully explain intraorganisational outcomes in cross-border contexts characterised by extreme political volatility. Notably, the study suggests that complementary constructs such as intergovernmental engagement are needed to account for the additional costs incurred by such settings.