Abstract
It is expected that firms will be deterred from engaging with tax havens by formal and informal institutions. However, our understanding of how tax haven investment decisions are influenced by varying institutional deterrents and organizational contexts remains limited. Combining the institutional complexity perspective with behavioral theory, this study explores how formal and informal institutions deter firm investment into tax havens. We theorize and explain how variance in the organizational context, such as the firm’s degree of managerial discretion and influence, act to sensitize or de-sensitize organizational decision makers to institutional deterrents. Drawing on a comprehensive dataset of tax haven subsidiaries by 2,857 firms between 2009-2017, this study contributes to the advancement of theory, policy, and practice on the global strategic management of tax havens.