1 : Location theory indicates that multinational firms will be deterred from making overseas investments into countries where institutions are weak. Discuss and illustrate what is meant by weak institutions in this context. Use the cases from the course to consider ways in which multinational firms might avoid some of the problems caused by weak institutions. Consider why we observe such large foreign direct investment flows between developed and emerging economies though institutions are often quite weak in the latter locations. Essay 2: Explain why in general we might expect that foreign direct investment flows will be lower between locations that are more distant. Your discussion should consider at least four different notions of distance, for example, based on the CAGE framework. Illustrate each notion of distance with examples from the cases in the course. Do you think that a multinational from the UK investing in China will evaluate the distance between the home and host country to be the same as would a multinational from China investing in the UK? This was feedback on a past essay I′ve written in the ″emerging markets″, a major remark was the lack of use of any framework or tool such as to accompany your analysis. As written below I would expect your discussion for these two prompts to engage more explicitly with theory/framework, like explicitly engaging with Ghemawat’s CAGE theory in both essays. Furthermore, a more in-depth discussion of institutions and institutional voids, especially in the first essay prompt, should engage with the views of North, Williamson, and Khanna & Palepu. These issues of distance and institutional voids give rise to increases in transaction costs as outlined by Ronald Coase. Furthermore, much of this relates to the liability of foreignness as outlined by Zaheer. Engaging with and citing this work is crucial. Also, making sure to find relevant links between cases and the theory and views of the academics cited above is fundamental to the success of the essay. For that reason read through all the academic papers and powerpoints linked below in order to find the most relevant and compelling points to analyze and connect. Feedback of mock essay : This was an interesting essay that built a coherent argument in answer to the question. You identified a series of risks and challenges for MNEs operating in emerging markets (clash of business cultures, political risk, institutional differences) and some strategies for firms to mitigate these. You did go through the use of case studies from the course which was good. You also demonstrated some understanding of the concepts of the course. The weakness of your essay was that you did not engage with course literature and theories in any in-depth way. To improve your essay, I would expect your discussion of distance or differences to engage more explicitly with Ghemawat’s CAGE theory. Furthermore a more in depth discussion of institutions and institutional voids should engage with the views of North, Williamson and Khanna & Palepu. These issues of distance and institutional voids give rise to increases in transaction costs as outlined by Ronald Coase. Furthermore much of this relates to the liability of foreignness as outlined by Zaheer. Engaging with and citing this work is crucial.
