Towards a Multifaceted View of Government Intervention

Abstract: This study examines the effect of governmental market intervention on MNCs´ internationalization process and operations in a foreign market. A divergence is proposed between past literature´s dominant view of government intervention as a constraining factor for MNCs, with the observation of many MNCs operating in Singapore, whose government takes a clear interventionist stance in the market. Therefore, this study aims to investigate if the traditional theoretical viewpoint of government intervention as mainly a constraining factor for MNC´s prevails or to what extent government actions can provide opportunities. By conducting a multiple-case study, interviewing six representatives from Swedish MNCs in Singapore, and applying a flexible pattern matching process, comparing theoretically proposed patterns with observationally derived patterns, this study presents two findings. Firstly, Swedish MNCs follow an internationalization process driven by experience and knowledge, where the Singaporean government´s market interventions facilitate establishment and operations by creating a positive business environment. Secondly, the Singaporean government´s market interventions creates both opportunities and constraints for Swedish MNCs´ operations, providing business opportunities as a customer and legislator in the market, as well as complicating talent acquisition by foreign employment quotas. Thus, this study concludes that the effect of the Singaporean government´s intervention is multifaceted, impacting Swedish MNCs´ internationalization process and operations in both positive and negative ways. Although existing theory generally provides a satisfactory explanation of the findings, our study illustrates the importance of adopting a broader multifaceted view of government intervention, for both future research and decision makers in international business.