The political license to operate (PLO) as a meta-complementary resource in an era of global decoupling

Recent research has found evidence of decoupling between the United States and China, driven by these two countries’ quest for technological dominance across industries. Foreign multinational enterprises (MNEs) that were motivated to enter China as a market for inputs or outputs (or both) are particularly vulnerable to this macro-level decoupling. In this context, we identify the growing importance of the political license to operate (PLO) as a meta-complementary resource, which can be restricted or removed at government’s discretion, and is very different from the classic social license to operate. We explore how MNEs navigate threats of PLO removal, as a function of their strategic motivation for operating in China and the features of the related, ‘ordinary’ complementary resources critical to MNE functioning.