The Role of Institutional Support in Attracting Swedish Foreign Direct Investment to Malaysia's Startup Ecosystem. “An analysis through the OLI Framework”

Abstract

In an increasingly globalized and competitive investments landscape, emerging markets like Malaysia are positioning themselves as an innovation-driven economy to attract foreign direct investment to their startup ecosystem. With the rise of digitalization and sustainability as global priorities, institutional actors play a significant role in shaping startup ecosystems and facilitating long-term international collaboration. Therefore, this study explores how three key institutional actors, MIDA, the Swedish Embassy and Business Sweden, contribute to shaping Malaysia's attractiveness as a destination for Swedish FDI in the startup ecosystem. Through expert interviews and based on the OLI Framework, complemented with Institutional Theory, the roles of these key institutions are analyzed in relation to ownership, location, and internalization advantages. The findings indicate that the actors not only support Swedish firms with initial market entry but also foster long-term sustainability and competitiveness. This is achieved through policy alignment, strategic support in green and digital transitions, and the reduction of market uncertainty. The study concludes that early engagement with institutional actors and sensitivity to the local business environment are crucial for successful FDI. Although challenges such as limited late-stage funding and bureaucratic delays still remain, Malaysia demonstrates strong preparedness for sustained competitiveness through robust institutional support, strategic position, and cost-efficient business environment.