How multinational corporations choose to organise foreign affiliates

We know too little about how international taxation affects the way that multinational corporations create new foreign affiliates to carry out cross-border economic activities. They have two options: corporate subsidiaries or non-corporate flow-throughs (the legal entities that pass income straight to owners, shareholders or investors). So investigating the factors that influence that choice is important because these are the activities that stimulate economic growth and development. But such corporations can also exploit differences between tax systems and shift income to low-tax jurisdictions. Responses to tax law changes, and whether the characteristics of new foreign affiliates vary according to the organisational form they take was researched by Dr Harald Amberger of WU Vienna, and Dr Saskia Kohlhase of Rotterdam School of Management, Erasmus University (RSM). What they found suggests that the choice can shape the future characteristics of investments abroad. Their findings were published in their paper, International taxation and the organizational form of foreign direct investment in the Journal of International Business Studies in May 2023.