Acta Universitatis Danubius. Œconomica, Vol 12, No 3 (2016)

Does Smart Power of ASEAN Cooperation Influence Firm Value? Evidence from Geopolitical Perspective

Mohd Fairuz Md. Salleh, Yusoff Wan Sallha, Norida Basnan


This study examines the influence of the ASEAN cooperation on firm value. As far as the cooperation of the Association of Southeast Asian Nations (ASEAN) is concerned, one aspect of geopolitical mechanisms is ASEAN’s smart power which combines hard and soft power. This smart power is considered an important mechanism for corporate strategies. Any changes in geopolitical decision between the ASEAN members will affect firm value especially firms segmented in the ASEAN countries. From a geopolitical perspective and by using data from public listed firms in Malaysia that were actively traded in ASEAN countries from 2009 to 2013, the study examined the influence of hard power indicated by military power, and soft power which refers to material resources and social power in terms of the relationship of political elites. The study found that the soft power of the ASEAN cooperation is positively associated with firm value. In contrast, the social power of political elites is negatively related to firm value, while the hard power fails to show any influence. Overall, the evidence suggests that corporate strategies should consider the benefit of ASEAN’s material resources and the risk of forging relationships with political elites when designing market penetration strategies.


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