Populism in Europe and Its Effects on Business

This paper aims to partially fill the literature gap on the impact of political populism in Europe on international business. Populism has typically been treated as a form of political risk or confined to studies of Latin America, but the recent rise of political populism in Western democracies requires a fresh approach to understanding how this phenomenon affects international business, particularly in Europe. After discussing how the political science literature has sought to explain the rise of populism, we provide an overview of the influence of populist political parties on business in twelve European countries, as well as their collective impact on the direction of European integration. We argue that populism's impact is greater than what the results of recent national elections would suggest, and that business has legitimate concerns about populism’s effects on trade, investment, and the competitive environment in select European countries. We then discuss strategies that business may employ to respond to populism in terms of corporate political activity and strategic and organizational decisions. We conclude that business is better placed to address the policies and pressures deriving from populism if the causes of populism’s rise are economic in nature (e.g., globalization, rise of emerging markets, financial crises, and labor market changes), rather than culture-based (including concerns related to identity, nationalism, migration, and progressive values).