Witold Henisz

Deloitte & Touche Professor of Management in Honor of Russell E. Palmer, former Managing Partner at The Wharton School

Biography

The Wharton School

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 topranked 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 InterAmerican 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.

Summary of Research Papers and Downloads

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
http://siteresources.worldbank.org/INTMOVOUTPOV/Resources/21042151148063363276/071503_Munck.pdf
http://www.nsd.uib.no/macrodataguide/topic.html
http://www.isadiscussion.com/view/0/datasets.html

Witold Henisz, Corporate Diplomacy: Building Reputations and Relationships with External Stakeholders (2014)

Witold Henisz, Sinziana Dorobantu, Lite Nartey (2014), Spinning Gold: The Financial and Operational Returns to External Stakeholder Engagement, Strategic Management Journal.

Witold Henisz, Sinziana Dorobantu, Lite Nartey (2014), Spinning Gold: The Financial and Operational Returns to External Stakeholder Engagement, Strategic Management Journal, 35 (12), pp. 17271748. 10.1002/smj.2180

Witold Henisz (2013), Preferences, Structure and Influence: The Engineering of Consent, Global Strategy Journal, 3 (4), pp. 338359.

Witold Henisz (2012), Strategy and Competition in the Market and NonMarket Arena, Academy of Management Perspectives, 26 (3), pp. 4051.

Witold Henisz, Raymond E. Levitt, Scott Richard (2012), Toward a Unified Theory of Project Governance: Economic, Sociological and Psychological Supports for Relational Contracting, Engineering Project Organization Journal, 2 (1), pp. 3756.

Witold Henisz (2011), Leveraging the Financial Crisis to Fulfill the Promise of Progressive Management, Academy of Management Learning & Education, 10 (2), pp. 289321.

Abstract: The financial crisis has the potential to unite two longsimmering threats to the legitimacy of business school research and pedagogy into a single conflagration. Business schools have come under increasing attack for their espousal of a strong form neoliberal belief system rooted in the discipline of economics and a lack of attention to practical and, in particular, heterogeneous national institutional contexts. A key insight emerging from a growing chorus of retrospective analyses of the crisis is the need for research and pedagogy to draw upon the breadth of social sciences to inform decision making under uncertainty and more prominently features crossnational variation in institutional context as well as systemic linkages between the behavior of individuals, organizations, academics, regulators and policy makers. While business schools are theoretically ideally positioned to offer such innovation and have done so in the past, the institutional barriers to change are substantial. Drawing on paired historical narratives of institutional changes to business schools and economic policy making, I outline a political strategy that leverages neoliberalism’s legitimacy crisis to forge alliances with government and civil society actors who share an interest in fulfilling the promise of progressive management.

Jandhyala, Srividya, Witold Henisz, Edward Mansfield (2011), Three Waves of BITs: The Global Diffusion of Foreign Investment Policy, Journal of Conflict Resolution, 55 (6), pp. 10451071.

Abstract: Bilateral investment treaties (BITs), agreements that provide extensive rights and protection to foreign investors, were first adopted in the 1960s, proliferated in the late 1980s and 1990s, especially among developing countries, and seemingly fell out of fashion after 2001. To explain this life cycle of diffusion across the international state system, we argue that BIT signing followed a traditional logic of diffusion for an innovation albeit here in the policy realm. In the first period, BITs provided a solution to the time inconsistency problem facing host governments and foreign investors. In the second period, these treaties became the global standard governing foreign investment. As the density of BITs among peer countries increased, more countries signed them in order to gain legitimacy and acceptance without a full understanding of their costs and competencies. More recently, as the potential legal liabilities involved in BIT signing have become more broadly understood, the pattern of adoption has reverted to a more competitive and rational logic. Our empirical tests of BIT signing over four decades provide evidence for such a threestage model.

Zelner, Bennet A. Witold Henisz, Guy L.F. Holburn (2009), Contentious Implementation and Retrenchment in Neoliberal Policy Reform: The Global Electric Power Industry, 1989 – 2001, Administrative Science Quarterly, 54(3): 379412 (lead article).

Abstract: We develop theory about the effect of domestic and global institutional forces across countries and over time, following a national government's adoption of a globally diffusing policy, on retrenchmentthe degree to which a government reinstates the objectives of a policy's predecessor without repealing the new policy to balance conflicting institutional forces. World political culture legitimates and supports the new policy, while the policy's domestic opponents seek to mobilize opposition to it. Peer country governments' behavior and intergovernmental organizations may help or hinder domestic opponents' efforts. We tested our model by examining governments' renegotiation of the terms of private electricity generation projects in 62 countries in 19892001. Although no country formally repealed electricity liberalization during that period, governments selectively renegotiated the terms of private investment in roughly 20 percent of private power generation projects in countries that liberalized. Results support our hypotheses about the effects of domestic and global institutional forcesthe former of which we measure through automated natural language parsing of 8.52 million newspaper articlesand the idea that domestic audiences' preexisting cognitive constructs and normative beliefs shape governments' implementation of globally diffusing policies.

Witold Henisz and E. Mansfield (2006), Votes and Vetoes: The Political Determinants of Commercial Openness, International Studies Quarterly, 50: 1.

Abstract: Some theories of foreign economic policy stress the importance of domestic interest groups, whereas others focus on the effects of domestic institutions. Debates between advocates of these approaches are longstanding, but little systematic empirical research has been brought to bear on the relative merits of these theories. We argue that while interest group demands and institutions are often regarded as having independent and competing effects, it is more fruitful to view the influence of each type of factor as conditional on the other. As explanations emphasizing societal interests contend, deteriorating macroeconomic conditions are a potent source of protectionist sentiment. The extent to which such conditions reduce commercial openness, however, depends centrally on a country's political institutions, especially the number of veto points in a country's policymaking structure and its regime type. We expect the effects of macroeconomic conditions on trade policy to become weaker as the number of veto points increases. We also expect both veto points and the societal pressures stemming from the economy to have a more potent impact on trade policy in democracies than in other regimes. The results of our statistical tests covering almost 60 countries during the period from 1980 to 2000 strongly support these arguments.

Past Courses

MGMT209 POL & SOC ENVIRON OF MM

Are you well prepared to manage or analyze business challenges and competitive threats in a variety of political and social environments? For example, what should you do to dissuade or counter an individual critic armed with a camera phone a YouTube account? Or a decentralized grassroots organization that seemingly pops up overnight, appears to have no single leader or headquarters, and yet is quite successful in capturing media attention? Or a government official who because of a tight reelection campaign or an internal challenge from a populist general turns on you? Lone individuals, small activist groups and unexpected political shifts have done extensive damage to the reputations and value of multinationals in recent years. And yet most companies don't plan for, or even think about, investing in building the kinds of solid relationships with community leaders, governments, NGOs, and other key players that can help them avoid such crises and, when necessary, draw upon their reservoir of stakeholder capital to respond quickly and decisively when a challenge or threat emerges. This semesterlong class provides an integrative perspective towards the management of these risks and opportunities. ,It highlights that better assessment of stakeholder opinion, understanding of how stakeholders impact firm value and of how to infuse stakeholder relationships with trust to unlock that value are increasingly critical elements of a firm's longterm success, particularly in emerging markets. Firms must also focus o n continual improvement in their stakeholder engagement, reinforcing their actions with strategic communications and via organizational culture. The course will give students a combination of practical tools and the latest academic thinking in the emerging field of corporate diplomacy.

MGMT611 MANAGING EST ENTERPRISE

The management of large, established enterprises creates a range of multifacet challenges for the general manager. A general manager needs to understand the internal workings of a firm, how to assess and create a strategy, and how to take into account increasing, globalization. While these issues are distinct, they are very much intertwined. As a result, this course will provide you with an integrated view of these challenges and show you that effective of an established enterprise requires a combination of insights drawn from economics, sociology, psychology and political economy.

MGMT715 POL & SOC ENVIRON OF MM

Managing effectively in challenging sociopolitical environments (e.g., emerging markets) requires a melding of art and skill in engaging external stakeholders to advance corporate interests. This means crafting international coalitions of stakeholders spanning politicians, regulators, bureaucrats, analysts, investors, lawyers, reporters, consumers, nonprofits, activists and local communities. It involves influencing these stakeholders' opinions, perceptions, behaviors and decisions so as to secure a favorable policy outcome, collective decision, shift in group opinion or pooling of resources that enhances the corporation's ability to generate a profit by satisfying a market demand. This course surveys the managerial, political, economic, sociological and psychological foundations of corporate diplomacy as well as case study examples of successful and failed implementation in order to develop an interdisciplinary framework for navigating complex sociopolitical environments. The insights gained can be applied to influence team decisionmaking and organizational politics as well as by individuals and organizations in lobbying, marketing, product development, distribution and sales, political campaigns and corporate, national or multilateral projections of soft power.

MGMT720 CORPORATE DIPLOMACY

Are you well prepared to manage or analyze business challenges and competitive threats in a variety of political and social environments? For example, what should you do to dissuade or counter an individual critic armed with a camera phone a YouTube account? Or a decentralized grassroots organization that seemingly pops up overnight, appears to have no single leader or headquarters, and yet is quite successful in capturing media attention? Or a government official who because of a tight reelection campaign or an internal challenge from a populist general turns on you? Lone individuals, small activist groups and unexpected political shifts have done extensive damage to the reputations and value of multinationals in recent years. And yet most companies don't plan for, or even think about, investing in building the kinds of solid relationships with community leaders, governments, NGOs, and other key players that can help them avoid such crises and, when necessary, draw upon their reservoir of stakeholder capital to respond quickly and decisively when a challenge or threat emerges. This semesterlong class provides an integrative perspective towards the management of these risks and opportunities. ,It highlights that better assessment of stakeholder opinion, understanding of how stakeholders impact firm value and of how to infuse stakeholder relationships with trust to unlock that value are increasingly critical elements of a firm's longterm success, particularly in emerging markets. Firms must also focus o n continual improvement in their stakeholder engagement, reinforcing their actions with strategic communications and via organizational culture. The course will give students a combination of practical tools and the latest academic thinking in the emerging field of corporate diplomacy.

MGMT970 APP METHODS MGMT RES

Students taking the course will be introduced to the seminal readings on a given method, have a handson 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 nonquantitative data, unstructured text and big data simulations.

Best Conference Paper Prize at Strategic Management Society Annual Meeting, 2013 Helen Kardon Moss Anvil Award Nomination, 2013 Excellence in teaching award, MBA Division (elective), 2012 Helen Kardon Moss Anvil Award Nomination, 2012 Helen Kardon Moss Anvil Award Nomination, 2011 Teaching Commitment and Curricular Innovation Award, 2011 Nominated for Best Paper for Practical Implications at the 2011 Strategic Management meeting, 2011 Finalist, Best Applied Paper in International Management (The Robert H. Schaffer Award) at the 2011 Academy of Management meeting, San Antonio TX, 2011 Best Paper 2010 Engineering Project Organization Conference, South Lake Tahoe, CA, 2010 Excellence in teaching award, Wharton Undergraduate Division, May, 2008 Excellence in teaching award, Wharton Undergraduate Division, May, 2007 Finalist, Aspen Institute’s 2006 Faculty Pioneer Award (one of eight finalists out of 100 nominees), 2006 Bronze Prize ($10,000) in International Finance Corporation / Financial Times 2006 Essay Competition on Topic of “Business and Development: The Private Path to Prosperity” (one of six prize winning essays out of over 500 submissions in total), 2006 Faculty teaching award (electives), MBA for Executives Program, Class 31East, 2006 Outstanding Reviewer Award, International Management Division, Academy of Management (one of 38 out of 656 reviewers so recognized), 2005 First Runner Up, Haynes Prize for Outstanding Scholar in International Business under the age of 40 at 2005 Academy of International Business Annual Conference, 2005 Faculty teaching award (electives), MBA for Executives Program, Class 28East, 2004 Finalist, Best Paper at 2002 Academy of International Business Annual Conference, 2002 Finalist, Haynes Prize for Best Paper by a scholar under the age of 40 at 2002 Academy of International Business Annual Conference, 2002 Outstanding Reviewer Award, International Management Division, Academy of Management, 2000 (one of 8 out of 250 reviewers so recognized), 2000 Richard N. Farmer Award for best dissertation in International Business, Academy of International Business, 1999 Finalist, The Free Press Doctoral Dissertation Award, Business Policy and Strategy Division, Academy of Management, 1999 Best Doctoral Student Paper, Telecommunications Policy Research Conference, 1998

Corporate diplomacy and stakeholder engagement: Five questions for Witold Henisz, The Smarter Business Blog 04/24/2014 Social License is the New Normal, The Vancouver Sun 04/24/2014 The Social Responsibility of Business is to Save the Planet, Bloomberg 06/20/2013 Setting the Standard for Corporate Responsibility and Sustainable Development, AccountAbility.org 02/09/2012 Mining for Stakeholder Cooperation, The Pennsylvania Gazette 01/10/2012 The Rise of Stakeholder Capitalism, The Motley Fool 08/04/2011 Stakeholder engagement improves valuation, Investor Relations Web Report 08/04/2011 Stakeholder Engagment in Mining Operations, TriplePundit 08/01/2011 Creating the Ties That Grow, Wharton@Work 07/13/2011 Stakeholders Drive Stock Values, Brunswick Review 02/08/2011 Financial returns on stakeholder management, Sinclair Knight Merz 02/04/2011 When Opportunities Lie in Risky Markets, Wharton@Work 11/10/2010 Managing Risk: Public Affairs and Enterprise Risk Management, Public Affairs Council 06/23/2010 The Hidden Risks in Emerging Markets, Harvard Business Review 04/28/2010 Doing Business in a Volatile World, Treasury & Risk Magazine 05/28/2009 How to Bungle Political Risks, CFO.com 05/24/2006

Knowledge @ Wharton

How Strong Stakeholder Bonds Can Help Firms Avoid a Crisis, Knowledge @ Wharton 10/20/2016 How Emerging Multinationals Are Embracing Social Responsibility, Knowledge @ Wharton 11/12/2015 ‘Corporate Diplomacy’: Why Firms Need to Build Ties with External Stakeholders, Knowledge @ Wharton 05/05/2014 Aluminum Giant Alcoa’s Costly Lesson on the Pitfalls of Corruption, Knowledge @ Wharton 03/27/2014 Mining in Latin America: Can Countries and Corporations Share the Wealth?, Knowledge @ Wharton 06/12/2013 Energy, Utility and Natural Resources Companies Meet Uncertainty with Technology, Knowledge @ Wharton 04/03/2013 What Hollande’s Election Means for the Eurozone, Knowledge @ Wharton 05/09/2012 Beyond the Gas Price Blame Game, a Thorny Case of Supply vs. Demand, Knowledge @ Wharton 03/14/2012 Troubled Times Ahead for North Korea?, Knowledge @ Wharton 12/19/2011 Where Does the Occupy Movement Go from Here?, Knowledge @ Wharton 11/18/2011 Seven Years in Jail and a $190 Million Fine, Knowledge @ Wharton 10/12/2011 Growth in South Africa? Go North…, Knowledge @ Wharton 08/30/2011 When Engaging with Your Stakeholders Is Worth Its Weight in Gold, Knowledge @ Wharton 07/20/2011 Crude Reality: Why High Oil Prices Are Here to Stay, Knowledge @ Wharton 03/16/2011 The New BRICS on the Block: Which Emerging Markets Are Up and Coming?, Knowledge @ Wharton 01/19/2011 America’s Aging Infrastructure: What to Fix, and Who Will Pay?, Knowledge @ Wharton 11/10/2010 Crisis, Contagion and Bailouts: What’s Next for the European Union?, Knowledge @ Wharton 05/12/2010 The Pain in Spain … And What It Means for Europe and Beyond, Knowledge @ Wharton 03/17/2010 Taking the ‘R’ out of BRIC: How the Economic Downturn Exposed Russia’s Weaknesses, Knowledge @ Wharton 02/17/2010 ‘A Race to the Bottom’: Assigning Responsibility for the Financial Crisis, Knowledge @ Wharton 12/09/2009 On the Job Training: Can Obama’s Huge Infrastructure Program Really Work?, Knowledge @ Wharton 01/07/2009 Ebb without Flow: Water May Be the New Oil in a Thirsty Global Economy, Knowledge @ Wharton 10/01/2008 The Race for Energy: What Will It Mean for Western Firms?, Knowledge @ Wharton 09/22/2008 Political Tensions Are Creating New Rules for International Business, Knowledge @ Wharton 09/22/2008 What’s Behind the Flareups in Oil Prices? Jeremy Siegel and Witold Henisz Weigh In, Knowledge @ Wharton 05/28/2008 An Earful on Ethanol: Rising Food Prices, Inefficient Production and Other Problems, Knowledge @ Wharton 05/28/2008 Navigating Olympic Sponsorship: Marketing Your Brand without Alienating the World, Knowledge @ Wharton 04/16/2008 When Are Emerging Markets No Longer ‘Emerging’?, Knowledge @ Wharton 03/05/2008 View from Dalian, China: The New Risk Architecture and Our Growing Interdependence, Knowledge @ Wharton 12/12/2007 In Oil Producers’ Brave New World, a Key Word Is ‘Partnerships’, Knowledge @ Wharton 05/02/2007 Russia: ‘Floating on an Enormous Pool of Petrodollars’, Knowledge @ Wharton 04/24/2007 Continuing Turmoil in the Power Industry: What It Means for the Major Players, Knowledge @ Wharton 03/22/2006 The Populist Left in Latin America: Threat or Opportunity for Investors?, Knowledge @ Wharton 03/07/2006 Are Failed Infrastructure Projects Linked to the Presence of the IMF or World Bank? Read on …, Knowledge @ Wharton 09/07/2005 An End to Global Textile Quotas: Watch China Sew Up the Market, Knowledge @ Wharton 02/09/2005 Do Governments Favor Foreign Firms over Domestic Ones?, Knowledge @ Wharton 04/21/2004 Collapse in Cancun: The World Trade Agenda Gets Sidetracked, Knowledge @ Wharton 09/24/2003 Lights Out: Lessons from The Blackout, Knowledge @ Wharton 08/27/2003 Business Implications of the U.S.Europe Rift, Knowledge @ Wharton 02/09/2003 The Outlook for Oil: What Lies Ahead?, Knowledge @ Wharton 01/29/2003 Abuse of Power: How Manipulative Trading Undermined Energy Deregulation, Knowledge @ Wharton 06/05/2002 Heated Debates Over Energy Issues, Knowledge @ Wharton 05/23/2001 How a Run of Bad Luck and Bad Laws Helped Ignite California’s Electricity Crisis, Knowledge @ Wharton 01/31/2001 How Political Risk Affects Infrastructure Investments, Knowledge @ Wharton 11/10/1999

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