This study investigates how the configuration of multinational enterprises’ (MNEs) internal value chain activities mitigates the threats of expropriation. Drawing on the complementary assets framework and expropriation literature, we employ the history-to-theory methodology and examine the cases of Standard Oil’s (New Jersey) and Royal Dutch/Shell’s investments in Argentina during the period of 1907-1945 to inductively develop a theoretical framework on the relationship between the configuration of MNEs’ internal value chain activities and the extent of expropriation threats from the host government. We maintain that (1) geographic separation of MNEs’ internal value chain activities and (2) unilateral specialization of the MNEs’ internal value chain activities located in the host country to those located outside the host country constitute individually necessary and jointly sufficient conditions to establish a barrier for the host government to profit from expropriation, thereby decreasing the threats of expropriation. The historical context of our study, with its similarity to the dynamics of the current global institutional environments, provides historical lessons and insights for MNEs to navigate through and strategize on the turbulent global environment of the current time.
