Solomiia Matsola

Abstract

The current realities of a changing global environment, combined with the rise in the number of armed conflicts, compel MNCs to develop complex strategies for managing political risks. Armed conflict represents an extreme case of political risk in which institutional frameworks face disruption and traditional risk management tools fail. By studying both foreign and domestic MNCs operating in Ukraine, this research uses war as a theoretical lens to extend political risk theory by applying dynamic capabilities and the institutional fit frameworks. It examines how MNCs adapt their dynamic capabilities and institutional fit in warfare, proposing an integrated model for managing political risks. The study explores how MNCs reconfigure their dynamic capabilities, specifically their sensing, seizing, and transforming capacities, in response to institutional change during warfare. Simultaneously, it investigates how the traditional concept of institutional fit is fundamentally challenged, requiring organisations to navigate institutional changes while developing alternative mechanisms to achieve legitimacy and operational effectiveness. The methodology is based on a qualitative approach, incorporating semi-structured interviews with managers of MNCs and an analysis of internal and publicly available company documents to gain a comprehensive understanding of political risk management mechanisms under extreme conditions. The research integrates dynamic capabilities theory with institutional fit theory to produce a new concept: war-adaptive dynamic capabilities — organisational processes enabling MNCs to survive institutional collapse rather than merely incremental change. It extends both theories, which were developed for stable contexts, into extreme uncertainty. A comparative foreign vs. domestic MNC analysis isolates how organisational origin shapes adaptive strategy, filling a gap where existing literature focuses on exit decisions rather than operational continuity.