Decisions Leading to Foreign Direct Investment by International Oil and GasCompanies in Developing Countries on the Example of Exxon Mobile in China and India

The world economy has witnessed a growing internalization reflected in terms of the rising share of world trade and the inflow of the FDI. The goal of this study is identifying and categorizing decisions leading to FDI by international oil and gas companies in developing countries in recent years and determine how and why companies invest in the international oil and gas companies in developing countries. To achieve the set goals, quantitative method (regression analysis and financial aspects) and qualitative method (case study of Exxon Mobile in China and India) were used. Results of the case studies of Exxon Mobile in China and India demonstrated main factors that lead companies to developing countries, namely, size of the market, high demand for oil and gas products, and low level of competition. As for regression analysis, it identified that raw material reserves and investor’s revenues factors positively affect managerial or executive decisions influence the flow of FDI in the developing countries, and tax rate and political stability factors do not. This suggests for managers to use a diversified business structure to gain a competitive advantage, analyze large emerging markets with the least international competition and take advantage of the temporary downturn in the business cycle and invest in M&A in the relatively closed oil and gas markets.