Necessary conditions in IB research: An introduction and application of necessary condition analysis

The aim of this paper is to familiarize the IB community with a new analysis technique able to research into necessary conditions. We screened articles published in two key IB outlets and identify more than 50 articles that refer to necessary conditions (e.g., a determinant is a necessary condition / is required for an outcome) either in theorizing or discussing findings. The necessity logic that underlies these formulations implies that a single determinant is necessary but not sufficient for an IB outcome; if it is not in place, the IB outcome will not exist. Among the articles reviewed, only five make use of a method able to test necessities, while all other empirical studies make use of more traditional techniques that are interpreted in the form that a determinant increases / is positively associated with an outcome. Hence, there is a huge potential for improving the theory-method-fit in IB research by using techniques able to appropriately research into the theoretical necessities outlined. NCA may be a fruitful avenue in this regard as it allows precise statements about which level of a condition is necessary for a specific level of the outcome. We demonstrate and evaluate this using an illustrative IB example on institutional environments and their relations with foreign direct investment performance.