Escape FDI and the Varieties of Capitalism: Why History Matters in International Business

Abstract

This paper addresses the need for a stronger perspective of history in International Business research. In order to illustrate this matter, we will discuss the topic of ‘escape FDI’ as a motive for foreign direct investments (FDIs). While prior research suggests a connection between ‘escape FDI’ and an economy’s degree of societal coordination in a quasi-ahistorical manner, we will argue that ‘escape FDI’ is an issue that liberal and coordinated market economies alike have witnessed. In fact, the relevance of simple dichotomies, such as coordinated and liberal economies, seems to break down in the face of shifting institutional conditions that are bound to very specific periods. Quite consciously, the present paper combines social science and historical methodologies, in an effort to produce a synthesis that will benefit both approaches to understanding international business and its larger context.