Foreign Direct Investment Ownership Mode Strategy and the Influences of Pillars of Economic Freedom

This paper addresses the influences of pillars of economic freedom in the host economies on foreign direct investment (FDI) ownership mode strategy of the multinational corporations (MNCs). Our study contributes to international business (IB) literature by being one of the first studies using the size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, business and labor to hypothesize and analyze ownership mode strategy options of the
MNCs (JVs vs. WOSs). It is also one of the first to address FDI ownership mode strategy of MNCs from an open and highly internationalized Nordic country (i.e. Finland) using relatively new and less researched concepts like different dimensions of economics freedom in the host emerging Asian economies. The
empirical analysis of 118 FDIs made by the Finnish firms in Asian economies indicates that easy access to sound money and high freedom to trade internationally lead to the preference of WOSs, while size of government and regulation of credit, labor and business lead to the preference of JVs by investing Finnish MNCs.