How MNEs Partner with Local Organizations in a Least Developed Economy

Attracting more ‘quality’ inward foreign direct investment (iFDI) is a key policy aim in many least developed countries (LDCs). Such investment may benefit local firms, enhance economic growth, and have societal advantages. Undertaking a comparative institutional analysis, we seek to explain why some multinational enterprises (MNEs) adopt policies and practices that are likely to have greater host-country benefits. We examine how institutions condition a) two MNEs, one Danish and one British, that both operate in the pharmaceutical industry, and b) the quality of their FDI in Bangladesh, an LDC. Home-country macro-level
institutions constitute our focal firms, moulding our focal firms’ decisions and interaction with local organizations. Our research contributes to institutional theory by highlighting how institutions condition the mechanisms that constitute and generate quality iFDI, revealing have a seemingly distant institution within MNEs home countries shapes and underpins the enactment of practices and mechanisms at the micro level in a host country.