Informal institutions and comparative advantage of South-based MNEs: Theory and evidence

• 成果类型: Article
• 署名作者: Chang, Pao-Li; Chen, Yuting
• 署名单位: Singapore Management University; Shanghai University of Finance & Economics
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2020.102566
• 发表日期: 2021
• 关键词: Informal institution; Firm productivity; Firm R&D intensity; FDI location

摘要

This paper builds a theory based on informal institutions to characterize the comparative advantage of Southbased MNEs. MNEs headquartered in countries with poorer state institutions are shown to endogenously invest more in firm-specific institutional capital to compensate for the lack of state institutions, and as an optimal response, undertake FDI in countries with weaker institutions. We conduct an extensive test of the theory using worldwide firm-level greenfield FDI flows during 2009-2016, employing (among others) variations in the interaction of prevalence of informal institutions at home and state institutional qualities of host countries, as well as heterogeneity across sectors and firms in their sensitivity to institutional support.