学术活动

2025年6月23日（周一）

10:30-12:00

Caleb H. Tse 

南洋理工大学

Foreign direct investment (FDI) strategy into host countries undergoing military conflict and facing international sanctions has attracted growing research attention due to recent global events, but the topic remains relatively understudied especially at the firm level given the complex interaction between geopolitical risk and MNE decision-making. While the evidence is mixed, studies show that host-country sanctions and heightened geopolitical risk due to the onset of a war, may alter MNEs’ FDI strategy by deterring future investments and encouraging divestment especially for MNEs from sanctioning countries, at least in the short term.

What is lesser known however, is how sanctions may differentially impact firms’ greenfield investments versus mergers and acquisitions (M&As) and how MNEs may navigate these sanctions. Using institutional theory and a legitimacy perspective, we argue that MNEs from non-sanctioning countries, countries more politically aligned to the host country, and countries without bilateral investment treaties face less institutional pressures and will thus increase greenfield investments despite heightened geopolitical risk from sanctions. In contrast, MNEs from sanctioning countries face heavier home-country institutional pressures, but may bypass these pressures by switching their investment strategy from predominantly greenfield investments to acquisitions. In addition, we argue that MNEs from sanctioning countries who have greater host-country legitimacy are in the best position to withstand institutional pressure and risk and will increase both greenfield investments and acquisitions despite sanctions. We test our predictions on a large panel dataset from multiple sources including the ORBIS database yielding roughly 70,000 investment transaction-level observations over a 3-year period. We employ a series of differences-in-differences (DiD) models and find strong support for our hypotheses. This study contributes to the growing IB literature on the impact of sanctions on FDI strategy, by shedding light on how MNEs may strategically navigate the impact of sanctions in today’s increasingly tense and complex geopolitical arena.