COMPATIBILITY IN COMPLEXITY? THE INVESTMENT REGIME COMPLEX AND FIRM STRATEGY

Abstract

This thesis investigates the impact of the investment regime complex on firm strategy and contributes to the burgeoning scholarship on international regime complexity. I examine whether the strategic participation of dyads in compatible international investment agreements (IIAs) influence the way in which multinational corporations (MNCs) organise their ownership structures, in particular, the establishment of ownership links across countries. Statistical analyses of 1,927 bilateral investment treaties, 317 preferential trade agreements, and the firm ownership structures of 500 MNCs supports the main hypothesis that strategically participating in compatible IIAs engender a greater number of cross-border direct firm ownership links. The relationship is strongest when the dyad consists of at least one country from the South. The findings are also robust after incorporating instrumental variables to take into account endogeneity and after employing the Heckman selection model to account for selection bias. The findings underscore the importance of IIAs in shaping the behaviour of private economic actors, and also illuminate the pressing need for policymakers to reconsider the effectiveness of existing economic instruments, such as IIAs, in regulating firm activities.