This paper addresses the question how managerial biases and heuristics influence MNE internationalisation decisions. By drawing on upper echelons and political science research, we show that the CEOs ideology, which is a proxy for his or her values and beliefs, is a crucial yet under-researched factor that may explain heterogeneous firm responses to host-country institutional contexts. We argue that firms are more likely to announce cross-border investment projects in locations where the political climate is aligned with the ideology of the CEO. This is because ideological biases in how executives perceive and assess information about potential investment locations leads them to perceive economic prospects in such countries more favourably. To test this effect, we introduce a novel measure that captures the CEOs’ ideological affinity with the host-country government. We find support for the baseline hypothesis that CEO ideological affinity increases the likelihood of firms announcing cross-border investments. Moreover, we show that the positive relationship between ideological affinity and investment announcements is weakened by CEO liberalism, while CEO power positively moderates this relationship. Our findings contribute to international business and strategic leadership literature, by indicating the importance of CEO values and beliefs as a determinant for MNE location choice strategies.
