Existing theories of strategic interactions in foreign direct investment (FDI) typically emphasize firms, especially multinational enterprises (MNEs), as the primary actors. However, this perspective overlooks the important role of local stakeholders in FDI. Local actors provide access to local markets and resources, which is crucial for MNEs to co-create value from FDI. At the same time, these local stakeholders seek to maximize their share of the co-created value from FDI. This study proposes a new framework based on value capture theory to incorporate local stakeholders into the analysis of strategic interactions. We define FDI as a biform game of value co-creation and distribution involving both MNEs and local actors. Using agent-based simulations, we demonstrate that no single dominant decision-making pattern exists for MNEs to succeed in this strategic interaction. Instead, we find that factors related to the bargaining power of MNEs vis-à-vis local stakeholders influence which MNE strategy is most effective.
