Political Economy and Strategic Management
The intersection of Political Economy and Strategic Business Management represents a dynamic space where macro-level forces shape micro-level decisions.
By Dr. S. Mosi Dorbayani, C.Mgr. | Chartered Managers Canada
Political economy examines how political institutions, economic systems, and societal values influence the distribution of resources and power. These factors directly impact the strategic choices businesses make, such as market entry, investment allocation, and risk mitigation. For instance, regulatory frameworks, trade policies, and taxation regimes can either enable or constrain corporate growth strategies. Multinational corporations must navigate varying degrees of state intervention, labor laws, and geopolitical tensions, making political economy an essential lens for understanding the broader context in which strategic decisions unfold.
From the perspective of Strategic Business Management, firms must integrate political-economic analysis into their long-term planning to remain competitive and resilient. This involves not only adapting to current policy environments but also anticipating shifts in governance, public sentiment, and global economic trends.
While strategic tools like PESTEL analysis (Political, Economic, Social, Technological, Environmental, and Legal) help businesses assess external pressures and align their operations accordingly; firms often need to engage in corporate diplomacy, lobbying, and stakeholder management to influence policy outcomes in their favor. In essence, strategic management becomes a balancing act—leveraging internal capabilities while responding to the evolving political-economic landscape that defines the rules of the game. To that end, here are a few recommendations:
- Align Strategy with Institutional Realities:
Adapt business models and strategic plans to fit the institutional frameworks of each market: laws, norms, and governance structures.
- Strategic Considerations:
- Customize strategies for different regions rather than applying a one-size-fits-all approach.
- Build relationships with local stakeholders—regulators, community leaders, and NGOs—to gain legitimacy and insight.
- Form strategic alliances or joint ventures to navigate regulatory hurdles more effectively.
- Build Organizational Resilience and Advocacy Capacity:
Develop internal capabilities to respond to shocks and influence policy environments proactively.
- Strategic Considerations:
- Train teams to be politically and culturally literate, especially in volatile regions.
- Invest in risk management systems and contingency planning.
- Establish a public affairs or government relations function to engage in lobbying, advocacy, and reputation management.
With reference to the above, managers can transform uncertainty into strategic advantage, turning political-economic complexity into a source of insight, innovation, and long-term value.
Taken together, in today’s volatile and interconnected world, the fusion of political economy and strategic business management is not just an academic concept, it’s a practical necessity. Managers who embrace this intersection gain a sharper lens through which to view risk, opportunity, and competitive advantage. By scanning the environment rigorously, aligning strategy with institutional realities, building resilient and advocacy-driven organizations, leaders can navigate uncertainty with confidence and clarity. The best course of action is not to retreat from complexity, but to engage with it - strategically, intelligently, and proactively. In doing so, businesses don’t just survive shifting political-economic tides; they shape them.
About the Author: 
Dr. Mosi Dorbayani is an internationally acclaimed executive adviser, strategist, author and educator whose work bridges the worlds of management, economics, international law, public policy, cultural diplomacy and socio-cultural neuroscience. With advanced degrees from Harvard, Aston, Sunderland, Wolverhampton, and Salford universities, he has consulted for multinational firms including KPMG, BNP Paribas, and Sony-Ericsson, offering training, coaching, and insight into organizational and leadership development, governance, and strategic foresight. He is author of 21 books, an award-winning scholar, and a multi-platinum award-winning songwriter.
For his full profile visit: https://www.dorbayani.com/mosidorbayaniprofile
