Large, multi-ethnic societies are a challenge for states. Ethnic groups sometimes reach political compromises that ensure stable polities and relatively open politics. They regularly renegotiate, contest, or reaffirm their representation in the state, their access to resources and positions, their status, and their relations with other groups. Political institutions can be modified to accommodate these demands and reach new compromises. In many instances, however, negotiations and compromise break down and violence replaces civil politics. At times, ethnonationalist rebellions or conflicts between ethnic groups are endemic.

Multi-ethnicity in itself is not a source of conflict. Many ethnic groups live side-by-side without fighting each other. Even in societies, such as Indonesia, where ethnic violence has involved many different groups, a majority has maintained peaceful relations. A complex mix of factors such as institutional incentives and threats, elite interests, and state policies shape the politicization and mobilization of ethnic identities. Although groups identify themselves in ethnic terms and differentiate themselves from other groups along a variety of ethnic identifiers, such as language, religion, or race, these differences are not sources of conflict. Rather, grievances arising from different statuses for groups, discrimination, exclusion, or differentiated access to political representation or economic resources are much more plausible factors in violent outcomes.

Different views regarding the correspondence of states to nations have been at the core of many conflicts. In the Westphalian system, states have been the legitimate territorial unit deemed to represent nations.