Hidden Risks in Emerging Markets
Entering any new market can be a risky proposition for a company, but political
prowess and mastery of new analytic tools can improve your chances of success, says
Bennet Zelner, associate professor in the logistics, business and public policy
He and co-author Witold Henisz, of the University of Pennsylvania’s Wharton School,
have determined best practices for firms to manage the political, social and economic
institutions they encounter when conducting business abroad.
Companies should master the art of political spin, says Zelner. And he’s not
talking about Washington’s brand of K Street lobbying. Zelner advises having an
ear to the ground in new markets, using data-mining technology to monitor news and
conversations online and in the media. Combined with natural language parsing software
— which can code sentences for negative and positive connotations — companies can
learn a lot about a region’s social norms and values and use that information to
“You can use this data to identify the really critical stakeholders and develop
an influence strategy,” he says.
Zelner says keeping tabs also helps when crafting a communications strategy and
creating a long-term presence.
“If you’re a foreign investor, you need to get the message that you’re not evil
to the local population,” Zelner says. “If you understand enough about the place
that you’re entering, you can probably engage in a much more effective dialogue
with local constituencies. In being a good citizen, you’re also much more likely
to have a more sustainable presence in the country.”