Little is known about the drivers of corporate investments in tax havens from emerging markets. This paper offers extensive descriptive statistics and regression analysis to illustrate the patterns and motivations for tax haven investments by Indian firms over the 2007-2017 period. We find that the motivations for Indian firms to invest in tax havens are not only driven by the benefits of tax avoidance and secrecy of these jurisdictions, but also to seek strategic advantage and efficiency gains in global markets.

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Emerging market firms operating in developed markets face high environmental uncertainties and identifying appropriate referent groups for behavioral imitation improves the likelihood of firm survival.

As economies undergo institutional transition, firms change their internationalization strategies to take advantage of the prevailing institutional environment of the time. Extant studies on firm internationalization have predominantly focused on the effects of host country institutional environments in determining the internationalization strategies of firms. However, recent evidence from emerging market firms indicates that motivations for going international, the choice of international locations and modes of market entry are influenced in part by the institutional environment of the home country. Underlying the successful internationalization of emerging market firms is a transformation in perspective from critical wariness to one involving foreign multinationals in the development process. Drawing upon the experience of Indian firms, this article accounts for the evolution of emerging country multinational enterprises and explains their internationalization by mapping the observed patterns to institutional changes in their home environment. In the process, this article develops propositions that map the internationalization strategies of firms with the maturation of economic institutions in their home country.

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