Abstract: The overseas business practices of multinational enterprises are faced with changing policies and complex institutional environment. Previous studies on policy uncertainty and its economic consequences fail to clarify whether companies can use cross-market forces to alleviate policy uncertainty. This paper uses the panel data of the global mobile phone industry from 2013 to 2022 to empirically test the relationship between policy uncertainty and multimarket contact. The results show that there is an inverted U-shaped relationship between host country policy uncertainty and multimarket contact. Specifically, under medium extent of institutional uncertainty, multinational enterprises could use multimarket contact to form mutual forbearance with local competitors, thereby alleviating the uncertainty of the host country market. Media governance in host countries and policy uncertainty in home countries amplify the inverted U-shaped relationship between policy uncertainty and multimarket contact. This paper provides important practical enlightenment for multinational enterprises to cope with the turbulent international business environment.

Key words: policy uncertainty, multimarket contact, mutual forbearance, multinational enterprises