Question

How might a country's legal system influence the decision of global corporations to locate or not to locate in that country?

Answer 1

Legal system of the country forms law and order environment of the country and it is closely evaluated by the global corporations. While doing the evaluation, the global corporations assess the fairness of the legal system, stability in decisions taken up by the court of laws and other competent authorities and regulations that are being used by the legal system to provide safe, secure and viable environment to pursue business. On this basis of evaluation, the global corporations take decisions to locate or not to locate in that specific country. It shows the strong influence of the legal system upon these global corporations or MNCs.

For example, if these corporations find legal system to be biased, unfair, not based on penal code, or are in transition mode with regularly changing rules, then global corporations withhold their decisions or get more clarity from the government before making a location decision.