Informal Organisations of Rent-Seeking Elites (IORSE) and Foreign Direct Investment (FDI): Introducing a New Construct and Exploring Its Influence Across Institutional Contexts

Vedrichkov, Ivan (2025) Informal Organisations of Rent-Seeking Elites (IORSE) and Foreign Direct Investment (FDI): Introducing a New Construct and Exploring Its Influence Across Institutional Contexts. Doctoral thesis, University of East Anglia.

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Abstract

The International Business literature identifies institutional distance as a key factor influencing Foreign Direct Investment (FDI). Institutional distance measures the differences between the institutional settings of the home and host countries of an FDI, as a widely accepted proxy for the internationalisation and presence of MNEs, highlighting the challenges firms encounter when adapting to unfamiliar environments. Despite its importance, the way institutional distance is measured remains debated, with scholars arguing between institutional economics, which emphasises formal and informal rules and their impact on economic development, and organisational institutionalism, which focuses more on the Liability of Foreignness (Lof).

This thesis addresses this debate by introducing Informal Organisations of Rent-Seeking Elites (IORSE) as a separate construct that integrates both formal and informal institutional dimensions. Building on Acemoglu and Robinson’s concept of Institutional Equilibrium (Acemoglu and Robinson, 2019), the research demonstrates that rent-seeking elites sustain extractive frameworks in developing and transitional countries by operating through their own elite networks, the presence of which is measured through it. In that way, the IORSE are shown to be key drivers of institutional distance between the developed and developing worlds.

This theoretical innovation also tries to tackle a deeper unresolved issue in the literature: the contested meaning of ‘good governance’ (Langbein and Knack, 2010) and ‘strong institutions’ (Cantwell et al., 2010). These concepts are generally used to denote high levels of institutional quality, but the thesis argues they are best understood in contrast to their opposite: the informal organisations of rent-seeking elites that underpin bad governance and erode institutional strength. By capturing these hidden drivers of fragility, IORSE aims to offer a more nuanced understanding than the general institutional distance alone for explaining the uneven success of institutional co-evolution processes involving Advanced Multinational Enterprises (AMNEs). Empirically, the thesis shows how IORSE sustain extractive economic institutions, heightens the Lof, and shapes MNE behaviour through evolving host–investor relations.

Focusing on FDI flows from the USA, China, and Russia, the thesis examines how they are influenced by IORSE, measured through factor analysis combining World Governance Indicators (Langbein and Knack, 2010) with Self-Expression Values (Inglehart and Welzel, 2010a), building in this way an alternative rent-seeking wealth metric. In doing so, the research highlights the crucial role of informal organisations in shaping global investment patterns and managing institutional differences, while bridging disciplines to establish a framework for understanding the relationship between institutions, culture, and FDI.

Item Type:	Thesis (Doctoral)
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
Depositing User:	Chris White
Date Deposited:	02 Jun 2026 14:14
Last Modified:	02 Jun 2026 14:14
URI:	https://ueaeprints.uea.ac.uk/id/eprint/103239
DOI:

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