Ideological Misalignment and FDI Location Choice of MNEs

While the effect of political ideology on corporate strategies has increasingly gained scholarly attention, research has yet to examine how ideological misalignment between firms and governments in the firms’ home countries affects FDI location decisions. Drawing on the perspective of escape motivation for FDI, this research proposes that ideological misalignment in domestic markets prompts firms to invest in ideologically aligned host countries as a strategy to mitigate the potential risks posed by domestic political discord. This study also reveals that escapism FDI behaviors driven by ideological misalignment are attenuated by the degree of firms' internationalization, suggesting that firms with extensive foreign operations are better equipped to buffer the adverse effects of home-country political ideologies. Analyzing data on PAC contributions and FDI activities of U.S. MNEs in manufacturing industries from 2012 to 2020, I find strong empirical support for the hypotheses, demonstrating how political ideology influences firms' strategic decisions in the context of international expansion. This study contributes to the understanding of political ideology by highlighting the relational nature of ideology—specifically, how divergence from the home government's ideological stance shapes firms' FDI entries into host countries with varying political environments.