Foreign Direct Investment Strategy of MNCs in the Context of Digital Transformation

Abstract

Nowadays, the process of digital transformation and the introduction of a series of destructive technologies has revolutionized the way the companies do business and has important implications for the Foreign Direct Investment (FDI) pattern of Multinational Companies (MNCs). The objective of this paper is to point out the change in FDI strategy of MNCs in the new context through a review of existing studies. The results show that digitization can lead to the withdrawal of FDI, as it allows MNCs to enter foreign markets without having to be directly present there. Traditional markets- and tangible resources-seeking FDI may be partly weakened by digitization; and other forms such as knowledge-seeking and tax-and financial-driven FDI may become more important. There are also a number of other trends such as the FDI de-democratization, FDI financialization; the increase in investment of traditional MNCs in the digital sectors and the trend of digital companies acquiring non-digital assets.