Reassessing FDI Logic Under Institutional Change. A Qualitative Study of Foreign Firms’ Perceptions of OLI Advantages in a Post-Brexit United Kingdom

Abstract

This study examines how Brexit has affected companies’ perceptions of the UK as a destination for foreign direct investment (FDI). The qualitative study is based on seven in-depth interviews with representatives of firms operating in the UK, and one pilot interview with a long-term resident with business-related experience in Ireland. The study adopts an abductive approach and applies the OLI paradigm, the four FDI motives and the Uppsala internationalisation model to assess how Brexit has affected strategic decision-making. The combination of these frameworks provides a dynamic perspective on how institutional change influences internationalisation. The findings suggest that the increased uncertainty has brought significant challenges, particularly for companies in export- and import-based industries. Furthermore, while the UK remains an important domestic market, companies' investment logic has become more cautious and dependent on firms’ ability to manage institutional uncertainty. Brexit has weakened several aspects of the UK's location- specific advantages, and the study suggests that while some companies have managed to adapt through operational changes, others have experienced more profound disturbances. Finally, this study recommends that managers align investment motives with institutional stability and focus on building valuable relationships and internal capabilities to manage uncertainty.