An Institutional Perspective on Foreign Direct Investment

The process of foreign direct investment (FDI) is inherently uncertain as decisions surrounding investments are impacted by fragmented environments which offer contested views as to appropriate actions. We propose a multi-level organizing framework of institutional influences on FDI and examine the differential effect of these forces at two points in time: Prior to a first investment and upon subsequent investments. We posit that upon initial entry, firms are impacted primarily by coercive host country pressures, industry mimeticism, and internal firm norms. We expect these influences to change on subsequent entries with normative forces having the most salience.