Hide and seek: evasion and search as FDI motivation

Abstract

Purpose The purpose of this paper is to argue for inclusion of evasive foreign direct investment (FDI) into search-based motivation typologies in international business. Design/methodology/approach Critically reassessing academic literature and using anecdotal evidence, the authors augment the theory of FDI motivation with the concept of evasion. Findings Evasive FDI is a firm-level response to denial-of-privilege by a state. Divergence of policy environments between home and host prompts relocation or international expansion of productive assets and often the affectation of ‘foreignness’ by the multinational enterprise (MNE). The role of responsibility evasion via FDI is understood in the research literature, mainly because of an emphasis on search-based motives and a failure to distinguish between escape and evasion. International business research is vulnerable to mis-identification of FDI motive which consequently distorts its strategic and policy implications. Originality/value The argument for inclusion of evasive FDI serves to augment the established, yet asymmetrically focussed typology of search FDI, demonstrating that evasion is conceptually and analytically distinguishable from search. Further, an augmented typology lends accuracy and insight to research into the reconfiguration strategies of MNEs and legitimation of the international business discipline itself, providing researchers with a more comprehensive account of FDI causation and offering new research paths.

MNEs and capital flight: The case of Russia

“…Prerequisites and motives of MNE participation in capital flight are separated in this paper into two groups -generated by (i) tax-avoidance and (ii) domestic economy imperfections which lead to tax evasion (Burmester and Scott-Kennel, 2019) and institutional escape of national capital (Brunnermeyer and Huang, 2018). In the case of developing countries, domestic economic imperfections are often transformed into asset safety motives with the purpose of protecting the property rights of private economic agents in more reliable foreign jurisdictions ("flight-to-safety") (Areski et al, 2013).…”