Home Country Institutions and MNEs’ Strategic Purpose in Least Developed Economies

Much research focuses on the determinants of foreign direct investment (FDI) into least developed economies, typically comparing macro-level factors. However, despite a desire among least developed economies to attract ‘quality inward FDI’ (iFDI), only a relatively limited number of studies have focused on the links between quality iFDI and the socio-economic benefits to the host country. Those studies that do exist tend to adopt a quantitative approach, comparing macro and/or sectoral level factors, and downplaying how individual firms interact with local organizations in the host economy. We draw on the comparative capitalisms literature to examine how country-of-origin macro-level institutions that influence the purpose of two pharmaceutical companies shape how those firms engage with host-country organizations. We find that the home country institutions help to inform the density of the ties that the two MNEs forge with local organizations, and, correspondingly, the level of benefits that the MNEs bring to the host economy.