Institutions and Investments by Emerging Economy Multinationals in Developed Economies: Solar PV Firms and the Role of Political Authorities in Germany

This Chapter examines how home and host-country institutions shape overseas investments by emerging-economy multinational enterprises (EMNEs). Recent research has revealed two key factors that distinguish EMNEs’ foreign investment from that by developed-economy firms: home-country governmental support to invest abroad and the acquisition of superior organizational capabilities overseas. This downplays, however, how host-country institutions forge those developed-economy firms’ assets that EMNEs often acquire. This Chapter illustrates how German institutions, particularly political authorities’ financial support, influence 1) the evolution of solar-photovoltaic firms and 2) the potential sale of those companies to overseas rivals, including EMNEs. The analysis explains the uneven geographical spread of crucial organizational capabilities as well as EMNEs’ expansion patterns, deepening our understanding of EMNEs and highlighting challenges for International Business theory and economic policies.