Research Interests: political and social risk identification and management, materiality of Environment, Social & Governance (ESG) factors, stakeholder engagement, business & socio-political conflict, project management, rise and fall of neoliberalism
Witold J. Henisz is the Deloitte & Touche Professor of Management in Honor of Russell E. Palmer, former Managing Director at The Wharton School, The University of Pennsylvania. He received his Ph.D. in Business and Public Policy from the Haas School of Business at University of California, Berkeley and previously received a M.A. in International Relations from the Johns Hopkins School of Advanced International Studies.
His research examines the impact of political hazards on international investment strategy including efforts by multinational corporations to engage in corporate diplomacy to win the hearts and minds of external stakeholders. In a National Science Foundation funded project he showed that markets value stakeholder engagement twice as much as the net present value of the gold ostensibly controlled by 19 publicly traded gold mining companies. He then assessed the contingencies that influence the choice of which stakeholder these firms should reach out to in order to positively influence valuation as well as how to best develop a cooperative relationship with that stakeholder. He draws upon these insights as well as examples from large scale construction management, sustainable tourism, development and military counterinsurgency in his forthcoming (April 2014) book Corporate Diplomacy: Building Reputations and Relationships with External Stakeholders. His earlier work analyzed (1) the political and economic determinants of government attempts to redistribute investor returns to the broader polity; (2) the strategic responses by organizations to such pressure; and (3) the determinants of the success of individual organizations in withstanding such pressure. His research has been published in top-ranked journals in international business (Journal of International Business Studies), management (Academy of Management Review, Academy of Management Journal, Administrative Science Quarterly, Organization Science, Strategic Management Journal and Strategic Organization), international studies (International Organization and International Studies Quarterly) and sociology (American Sociological Review). This research has been profiled for managers in Harvard Business Review, Brunswick Review, Accountability.org, Motley Fool, TriplePundit, Investor Relations Web Report, The Public Affairs Council, The Penn Gazette and Knowledge@Wharton. He served as a Departmental Editor at The Journal of International Business Studies and is currently an Asssociate Editor at Strategic Management Journal.
Witold has won multiple teaching awards at the undergraduate and graduate levels for his elective courses that highlight the importance of integrating a deep understanding of political and social risk factors into the design of an organization’s global strategy. He has authored teaching cases on the experiences of AES Corporation in the Republic of Georgia, the management of the bankruptcy of Thai Petrochemical Industries, the development of the Rosia Montana gold mine in Romania and the financial valuation of sustainability initiatives at Newmont’s Ahafo mine in Ghana. He also teaches sessions on Corporate Diplomacy for multiple open enrollment and custom Executive Education programs at the Wharton School including a 3.5 day open enrollment program on the topic.
Witold has served as a consultant for Anglo Gold Ashanti, Rio Tinto, Shell Corporation, Maritime Financial Group, The World Bank, The Inter-American Development Bank, The Conference Board, Eurasia Group, and Philippine Long Distance Telephone Company (PLDT). He previously worked for The International Monetary Fund. He is currently a principal in the political risk management consultancy PRIMA LLC.
Download POLCON Database (2017 release (with data to 2016) now available)
Consider using the CHECKS index of the Database of Political Institutions of the World Bank as a robustness check.
For more information on the relative strength and weaknesses of these and other datasets see the following external overviews: http://siteresources.worldbank.org/INTLAWJUSTINST/Resources/IndicatorsGovernanceandInstitutionalQuality.pdf
Abstract: A growing body of research has extended the analysis of the materiality of ESG criteria from the perspective of equity investors to creditors. Past research and analysis have demonstrated the link between better management of ESG criteria and better management of risk overall. Despite this growing consensus and consistent evidence that ESG performance is correlated with credit risk, no empirical evidence has yet linked ESG performance to cost or expense variances or revenue shortfalls that could explain these correlations. The authors attempt to address this lack of mechanism‐based empirical evidence by citing and then building on a number of well‐publicized cases with analysis of two major ESG issues—indigenous land claims and biodiversity—as they affect the global project finance and agriculture sectors. Broadening these single‐sector results, the authors use a novel dataset providing systematic coding of material events reported in the media across a variety of empirical settings to produce the first large‐sample empirical evidence of the mechanisms linking ESG performance to credit risk.
Ruth Aguilera, Witold Henisz, Joanne Oxley, J. Myles Shaver (2019), Special Issue Introduction: International Strategy in an Era of Global Flux, Strategy Science, 4 (2), pp. 61-69.
Witold Henisz and Edward Mansfield (2019), The Political Economy of Financial Reform: De Jure Liberalization vs. De Facto Implementation, International Studies Quarterly, 63 (3), pp. 589-602.
Abstract: Over the past three decades, numerous countries have engaged in financial reform, prompting widespread interest in the sources of this development. Virtually all of the studies conducted on this topic, however, have focused on explaining neoliberal policy adoption in the financial sector, without addressing whether the adopted reforms actually generate neoliberal economic outcomes. This gap in the literature is important because many policy reforms are not implemented or enforced. In this article, we conduct one of the first studies of the conditions under which de jure financial reforms are implemented, yielding de facto financial liberalization. We argue that democracy inhibits de facto financial reform when society at large is dissatisfied with government. Under these circumstances, democratic officials may be tempted to announce but not to follow through on financial policy liberalization or be unable to follow through, either fearing or facing opportunistic political opposition from legislative or partisan veto players who either represent or seek the electoral support of interest groups harmed by implementing financial reforms. Based on an analysis of ninety countries from 1980–2005 corroborated by a series of illustrative case studies, we find considerable support for this argument.
Witold Henisz, Dhruv Malhotra, Robin Nuttal, A new measure to assess companies’ external engagement in London School of Economics Blog.
Witold Henisz and Rachelle Sampson, Redesigning Management Education for the Long-Term in Stanford Social Innovation Review.
Lite Nartey, Witold Henisz, Sinziana Dorobantu (2018), Status Climbing Versus Bridging: Multinational Stakeholder Engagement Strategies, Strategy Science, 3 (2), pp. 367-392.
Abstract: Multinational corporations seeking to overcome the “liability of foreignness” through partnerships with stakeholders in their overseas markets face an important tension in choosing between two alternative strategies. Firms who build relationships with high-status local stakeholders may experience increased cooperation and reduced conflict with other stakeholders. However, the short-term benefits of this status climbing strategy may be difficult to sustain because stakeholders with low-status, particularly those outside the formal political structure, are more likely to increase their conflict as the firm becomes increasingly distant from them. An alternative strategy of bridging structural holes in the host country stakeholder network also faces theoretical limits as access to scarce information and resources is likely to engender conflict with other stakeholders. The status climbing strategy is more attractive where insider connections dominate (i.e., the rule of law is weak) while the bridging strategy is more attractive in countries with stronger rule of law. In other words, as the rule of law strengthens, we show that multinational entrants focus more on what they know rather than whom they know. Our analyses use a hand-coded dataset of almost 52,000 media-reported stakeholder interactions that capture the network of relationships among 4,623 stakeholders from 19 gold-mining companies operating 26 mines in 20 countries, and the evolution of these networks from 1993 until 2008.
Witold Henisz, Business, Inclusive Stakeholder Relations and Conflict.
Independent Study Projects require extensive independent work and a considerable amount of writing. ISP in Finance are intended to give students the opportunity to study a particular topic in Finance in greater depth than is covered in the curriculum. The application for ISP's should outline a plan of study that requires at least as much work as a typical course in the Finance Department that meets twice a week. Applications for FNCE 899 ISP's will not be accepted after the THIRD WEEK OF THE SEMESTER. ISP's must be supervised by a Standing Faculty member of the Finance Department.
The senior thesis course is a capstone for seniors in the Huntsman Program in International Studies and Business. Students in the Huntsman Program should consult with the Huntsman Program advisors for more information.
Managers, consultants, investors and creditors increasingly acknowledge the importance of stakeholder opinions of the acceptability of a company's operations for that company's ability to achieve its organizational mission and to deliver a financial return. The rhetoric that companies must manage their stakeholder relations as well as shareholder relations is rapidly shifting from a philosophical critique of the functioning of the capitalist system to a strategic, financial, operational and societal imperative. Managers, consultants and investors are increasingly drawing on new unstructured data on the identity and issues of concern of stakeholders to align corporate and investment strategy with stakeholder demands on issues ranging from environmental externalities (e.g., climate change) to human rights. This course provides students the latest tools to use this data for stakeholder and issue mapping as well as financial valuation. It also offers more behavioral skills critical for external stakeholder engagement including trust building and communications as well as internal stakeholder engagement. In short, it prepares students to engage in Corporate Diplomacy (i.e., to influence or assess external stakeholders' opinions of the acceptability of a company's operations at a moment in time and to convince internal stakeholders to adapt their behaviors, systems and outputs` when necessary).
This course is about managing large enterprises that face the strategic challenge of being the incumbent in the market and the organizational challenge of needing to balance the forces of inertia and change. The firms of interest in this course tend to operate in a wide range of markets and segments, frequently on a global basis, and need to constantly deploy their resources to fend off challenges from new entrants and technologies that threaten their established positions. The class is organized around three distinct but related topics that managers of established firms must consider: strategy, human and social capital, and global strategy.
All successful firms go global. This course provides a broad introduction to international business. You will learn about who loses and who gains from trade, what are the effects of tariffs and non-tariff barriers, the World Trade Organization (WTO), regional trading blocs, and NAFTA. The course then turns to the international financial architecture, focusing on exchange rate risk. We then move to multinational firm strategies, including a discussion of the reasons for why firms choose to do business globally through trade or FDI, international tax strategy, joint ventures, technology transfer, different ways to be a multinational firm, and ethical dilemmas. The class is a mix of lectures and cases that allow students to synthesize the extensive materials on multinational management, international institutions, economic policies, and politics with a goal towards formulating multinational firm strategy.
Managers, consultants, investors and creditors increasingly acknowledge the importance of stakeholder opinions of the acceptability of a company's operations for that company's ability to achieve its organizational mission and to deliver a financial return. The rhetoric that companies must manage their stakeholder relations as well as shareholder relations is rapidly shifting from a philosophical critique of the functioning of the capitalist system to a strategic, financial, operational and societal imperative. Managers, consultants and investors are increasingly drawing on new unstructured data on the identity and issues of concern of stakeholders to align corporate and investment strategy with stakeholder demands on issues ranging from environmental externalities (e.g., climate change) to human rights. This course provides students the latest tools to use this data for stakeholder and issue mapping as well as financial valuation. It also offers more behavioral skills critical for external stakeholder engagement including trust building and communications as well as internal stakeholder engagement. In short, it prepares students to engage in Corporate Diplomacy (i.e., to influence or assess external stakeholders' opinions of the acceptability of a company's operations at a moment in time and to convince internal stakeholders to adapt their behaviors, systems and outputs` when necessary). There are no formal prerequisites but participants should be able to contribute some individual expertise from previous coursework, training, and work experience and will, at other times, rely heavily on their peers to summarize and introduce key concepts and perspectives from other disciplines, industries or countries with which they may be less familiar.
ASP topics can be individually selected by the student with the advice and consent of any instructor in the management Department. All ASP registrations require the written consent of the instructor and appropriate course and section number on the registration form. If the student has the instructor's written permission, he/she is not required to obtain written consent from the Department. Students, however, should send an email to MGMT-Courseinfo@wharton.upenn.edu to request the course and section numbers
This course is designed to provide students with an understanding of the methodological approaches we commonly think of as qualitative, with special emphasis on ethnography, semi- structured interviews, case studies, content analysis, and mixed-methods research. The course will cover the basic techniques for collecting, interpreting, and analyzing qualitative (i.e. non-numerical) data. In the spring quarter, the course will operate on two interrelated dimensions, one focused on the theoretical approaches to various types of qualitative research, the other focused on the practical techniques of data collection, such as identifying key informants, selecting respondents, collecting field notes and conducting interviews. In the fall semester, the course will operate on two interrelated dimensions, one focused on the theoretical approaches on building arguments and theory from qualitative data, the other focused on the practical techniques of data collection, such as analyzing data, writing, and presenting findings. Note: This class is part of a two-part sequence which focuses on qualitative data collection and analysis. The first of this course, offered in the Spring, focuses on data collection and the second half of the course, offered the following Fall, will focus on qualitative data analysis. Each course is seven weeks long. Students may take either class independently or consecutively.
The goal of the course is to provide you with a foundation in some of the major research areas that underpin the study of Multinational Management. International Business (and the study of MNCs) is an interdisciplinary field. As such, our survey of the seminal articles in the field will span a number of different theoretical and empirical approaches (i.e., economic, managerial, organizational and institutional). Much of our seminar discussions will focus on identifying and developing interesting research questions raised by this interdisciplinary literature, which offers many opportunities for systematic empirical study.
This course builds on the foundational material presented in MGMT 955 with a deeper focus on current research examining institutional influences on multinational management. These include regulative supports (e.g., laws, regulations, contracts and their enforcement through litigation, arbitration of incentive compatible self-regulation) but also normative (e.g., socially shared expectations of appropriate behavior, and social exchange processes) and cognitive (e.g., creating shared identity to bridge differences in values, beliefs and framing) elements of the institutional environment. We will examine not only strategic responses in the market environment but also influence strategies of multinational and domestic firms that seek to alter the institutional environment in which they operate. We will draw not only upon the international business literature but also related literatures including political economy, law, finance, communications, institutional theory, strategic corporate social responsibility, tourist management, construction management, management of extractive industries, negotiations, social movements and network theory (really!).
Students taking the course will be introduced to the seminal readings on a given method, have a hands-on discussion regarding their application often using a paper and dataset of the faculty member leading the discussion. The goal of the course is to make participants more informed users and reviewers of a wide variety of methodological approaches to Management research including Ordinary Least Squares, Discrete Choice, Count Models, Panel Data, Dealing with Endogeneity, Survival/failure/event history and event studies, experiments, factor analysis and structural equation modeling, hierarchical linear modeling, networks, comparative qualitative methods, coding of non-quantitative data, unstructured text and big data simulations.
Boards need to address globalisation fears
Sky News’ Ticky Fullerton spoke with Professor Witold Henisz from The Wharton School on the demand for corporate diplomacy.
Companies are increasingly paying attention to environmental, social and governance risks, as these can affect the bottom line.Knowledge @ Wharton - 10/17/2018
The Environmental and Risk Management MBA major was primed for change when Samantha Klug, WG’19, reached out to Assistant Prof. Sarah Light and Assistant Prof. Arthur van Benthem to discuss reconfiguring it with additional content and options. “One of the reasons why I came to Wharton is because there is…Read MoreWharton Stories - 12/17/2018