The impact of state activism on domestic multinationals: The case of Czechia and Hungary

This study examines how changing state activism has influenced the internationalization of Czech and Hungarian MNEs after the global financial crisis. Identifying four key channels – state ownership, business and regulatory environment, industrial policies, and 'quiet politics' – we note distinctions in state-business relationships and characteristics of multinationals between the two countries. Hungary experiences a surge in state activism, while Czechia faces relative stagnation with occasional setbacks. Over time, the industrial policy and quiet politics channels have become increasingly important. This is reflected in changes among the top Hungarian multinationals, with new entrants and new owners of existing ones, while no significant changes are observed among Czech MNEs. The study introduces the concept of 'defensive internationalization' as a response to an unstable business and political environment, showcasing long-lasting impact on the location of headquarters. The increasing role of industrial policies and new EU programs may enhance the state’s influence on MNEs, yet they also raise concerns about corruption and public fund diversion.