Where Angels Fear To Tread: FDI Into Sanctions Locations

We apply the resource-based view (RBV) to explore the determinants of FDI into sanctioned locations. We argue that both greater resources and greater experience will help multinational enterprises (MNEs) to overcome sanctions, a dark side to resource munificence. We also build on institutional theory to examine contextual conditions and find that effective home country institutions deter FDI to sanctioned locations and decrease the magnitude of the moderating effect of firm resources and experience. Moreover, FDI to sanctioned locations will be greater from firms in home countries that are themselves sanctioned because of the resulting specific ownership advantages: such home country advantages also weaken the impact of firm resources and experience. We test these ideas on a large panel dataset and find support for our arguments.