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

• Main Authors: CHANG, Pao-Li, CHEN, Yuting
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: FDI location; Firm productivity; Firm R&D intensity; Informal institution; Finance; International Economics; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/soe_research/2418; https://ink.library.smu.edu.sg/context/soe_research/article/3417/viewcontent/Informal_institutions_comparative_advantage_South_av.pdf
• Institution: Singapore Management University

This paper builds a theory based on “informal institutions” to characterize the comparative advantage of South-based 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 i...