Necessary conditions in international business research–Advancing the field with a new perspective on causality and data analysis

Abstract

Many researchers in international business (IB) refer to necessity when they theorize about the relationships between different concepts. However, necessary conditions involve a specific causal logic: they represent constraints, bottlenecks, or critical factors that must be overcome for a desired outcome to exist. Usually, this logic is not fully acknowledged, neither in theoretical thinking nor in empirical research. In this paper, we demonstrate the relevance of necessary conditions in IB research and discuss how an adequate consideration of necessity logic can advance the field. Furthermore, we introduce necessary condition analysis (NCA) as a new analytical technique that identifies necessary conditions in data sets. We illustrate its application by analyzing whether certain institutional factors are necessary conditions for inward foreign direct investment. Finally, we assess the value of necessity logic and NCA as novel approaches to think about causality and to analyze data in IB.