Empirical analysis reveals institutional irregularity accelerates foreign investment in emerging market firms, indicating domestic disruptions drive rapid international expansion.
Prior research on institutional dynamics has revealed the impact of institutional change on a firm’s internationalization decisions. We investigate institutional irregularity, which denotes the extremes of states of change in institutions. By integrating the dynamic institution-based view with the global factory framework, we examine the impact of COVID-19 institutions’ irregularity on the speed of an emerging market firm’s (EMF) first outward foreign direct investment (OFDI) after the pandemic’s outbreak, as well as the moderating effect of the EMF’s pre-pandemic OFDI scope. Our empirical tests of the first post-pandemic OFDI by EMFs reveal that home-country institutional irregularity accelerates firms’ post-pandemic OFDI, and that this effect is partially conditioned by the firm’s pre-pandemic OFDI scope.
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Tang et al. (2026) studied this question.
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