1. Introduction

The connectedness of the world economy offers advantages and disadvantages for companies that seek international growth. For multinational companies (MNCs), global economic policies like trade agreements, exchange rate stability and import-export controls underwrite internationalisation policies. Trade agreements, for example, help reduce entry barriers and market access by incentivizing businesses to adopt high-risk entry pathways. However, currency volatility raises financial risks that discourage longer-term investments and encourages businesses to take on agile, low-capital approaches to manage currency risk. The import-export ban also impacts companies’ global plans by affecting supply chain configurations and entry-mode preferences. This ability to analyse how these policies impact company strategy is crucial in the fast-changing world we now live in, where frequent policy revisions can influence market entry decisions, resource and operating models. While there is a great deal of literature on international business and economic policy, few studies are fully informed about how these policy variables contribute to pathways to internationalisation [1]. This study hopes to fill this void, using a quantitative approach to examine how trade deals, exchange rate swings and import-export controls influence the actions of corporate globalization. Drawing on these dimensions, this paper contributes to a sophisticated understanding of the strategic adjustments firms make to overcome policy-driven uncertainty in global markets that is relevant for both business and policymakers.

2. Literature Review

2.1. Commercial Partnerships and Market Access

Trade deals have long served as the main driver of cross-border trade, often offering businesses better access to markets, lower tariffs and simplified regulatory procedures. In reducing barriers to entry, trade agreements allow companies to reduce prices and optimise profits in new markets, especially those covered by free trade agreements (FTAs) or regional economic partnerships. These studies demonstrate that, in the literature, such arrangements positively relate to the intensity and volume of corporate internationalisation programmes. In new research, firms that are exposed to markets controlled by bilateral or multilateral agreements have greater strategic certainty and invest more aggressively in assets and local alliances in order to profit from policy advantages [2]. Furthermore, academics note that firms deliberately change modes of entry according to trade agreement terms; in safer markets they might prefer joint ventures, or 100% subsidiaries in liberalised markets. This implies that the form and content of trade deals have a profound impact on companies’ strategies for global expansion and risk-taking.

2.2. Exchange Rate Volatility and Investment Planning

Volatility in exchange rates is a crucial factor in cross-border trading as it drives margins, investment returns and pricing across borders. The literature captures how currency shocks present threats and opportunities, depending on how firms can deal with their financial risk management. Studies have suggested that currency stability generally stimulates global investment and facilitates cross-border trade by alleviating financial insecurity. But fluctuating exchange rates are often a major issue, especially for small- and medium-sized companies that might not have sophisticated currency hedges in place [3]. The exchange rate mandates opportunistic pricing and cost-control practices for enterprises. Experts believe that companies entering markets where exchange rates are unstable might choose to pay less for capital, or use export rather than FDI approaches to reduce financial risks. These findings stress the need for businesses to develop flexible financial models that respond to changes in exchange rates.

2.3. Import-Export Caps and Positioning Advantages

Import-export barriers like quotas, tariffs and non-tariff barriers affect how companies make strategic internationalisation decisions. It’s been proven that high import duties discourage businesses from entering foreign markets because they reduce margins and weaken competitive advantages. Non-tariff barriers such as licensing and regulatory requirements can also drive up the prices of foreign companies and inhibit their freedom to compete effectively in constrained markets. It’s evident from the literature that companies subject to tight import-export terms will often adjust their internationalisation strategies, even partnering with local companies to get around tight direct regulations [4]. These restrictions also drive supply chain decision making with manufacturers choosing to source components in-house or from third-country suppliers if they face import restrictions. Therefore, import-export barriers affect entry mode choice and force companies to reassess their position, both in terms of competitiveness and of operations, in the global marketplace.

3. Research Methodology

3.1. Data Collection and Sampling

The research uses a rigorous quantitative approach to study the consequences of global economic policies for routes to corporate internationalisation. The data were carefully extracted from a sample of MNCs with sectors ranging from technology, manufacturing and services, and from diverse regions across North America, Europe and Asia-Pacific. This diversity makes findings representative and applicable across a wide variety of industry and regional scenarios. The information came from companies’ financial statements, annual reports and government policy files, which enabled trade deals, exchange rates and import-export barriers to be quantitatively determined [5]. The sample pool included firms that expanded abroad over the past 10 years, enabling us to understand how firms today responded to new policy announcements. After collection, the data was run through multivariate regression analyses to find out correlations and causal possibilities between the economic policy variables and the preferred internationalisation pathways. This method provides solid statistical support for identifying the unique trajectories and trends in corporate responses to international economic policy [6].

3.2. Model Specification and Variables

The main analytical tool here is a multi-variable regression model, which measures how economic policies affect corporate internationalisation decisions. In this model, the dependent variable (Y) represents the level and type of internationalisation path selected by each firm (JVs, wholly owned subsidiaries, or export-oriented models). A significant set of independent variables are: trade agreement presence (T), exchange rate volatility (E), and an import-export restriction index (R). T is a value measured on a binary scale, with ‘1’ for being present in a market subject to an FTA or regional economic partnership and ‘0’ otherwise. Exchange rate volatility (E) is the variance of exchange rates over time that is calculated from historical currency fluctuation data. Import export restriction intensity (R) is calculated from composite index of tariffs and non-tariff barriers based on a weighted scoring scale for restricting restrictions [7].

Control variables are incorporated to isolate the effects of economic policy on internationalization decisions, including firm size (S), industry type (I), and the GDP of the host country (G). The multi-variable regression model can be expressed as follows:

\( Y=α+{β_{1}}T+{β_{2}}E+{β_{3}}R+{β_{4}}S+{β_{5}}I+{β_{6}}G+ϵ \) (1)

where \( Y \) denotes the internationalization pathway, \( α \) is the intercept \( {β_{1}},{β_{2}} \) , and \( {β_{3}} \) represent the coefficients for trade agreement presence, exchange rate volatility, and import-export restrictions, respectively, while \( ϵ \) is the error term [8]. By examining the coefficients \( {β_{1}},{β_{2}} \) ,and \( {β_{3}} \) ,we gain insight into the statistical significance and strength of each policy variable’s impact on internationalization strateqies. This model thus enables the identification of statistically significant relationships, offering a comprehensive understanding of how firms prioritize their internationalization processes in response to varying policy conditions.

3.3. Experiment Process

The experiment started by separating firms into two main categories, those that had largely adjusted their internationalisation approach due to economic policy reforms, and those that hadn’t. This classification was needed to see how different economic policies affect firms that are less or more sensitive to policy change. Firm performance, such as mode of market entry, use of resources and investment, was tracked over a number of years to record how the firm responded to policy changes. The first phase was a way of synchronising firm responses to specific policy developments, including new trade agreements, exchange rate adjustments and changes in import-export barriers. This synthesis set out a timeline of strategic adjustments and was the starting point for empirical investigations. After data classification, a regression was performed to determine the direction and magnitude of the correlations between policy variables and internationalisation decisions [9]. The regression focused on estimating the impact of trade agreements (facilitating market access), exchange rate stability (affecting financial decisions) and the restrictiveness of import-export regimes (impacting supply chain arrangements) on firms’ decision on market entry strategy. For example, companies in countries with favorable trade agreements were more likely to seek high-commitment entry strategies, like wholly owned subsidiaries, given the low regulatory implication and lower entry costs. It is this empirical work that offers important information on the causal impact of economic policies, and gives us insight into how firms manage and react to policy-induced challenges and opportunities during internationalisation [10].

4. Results and Discussion

4.1. Influence of Trade Agreements on Market Entry Strategies

This analysis shows a very positive correlation between whether trade agreements exist and firms’ willingness to invest in FDI, indicating that policy tools can reduce barriers to entry, both physical and immaterial. In particular, companies that had favourable trade agreements had a 25-40% greater likelihood of creating subsidiaries or wholly owned businesses in overseas markets than companies without those deals. That trend can likely be attributed to low tariffs, uniform regulations, and standardised processes that bring lower entry costs and less risk in complying with regulations. For instance, high-capital entry modes saw a dramatic rise in the presence of firms in industries where tariffs were reduced by FTAs. Table 1 below provides an overview of FDI rates by firm with trade agreement versus without, highlighting sectoral differences in FDI rates and showing how entry mode selection differs across sectors [11]. These findings are consistent with what we already know and suggest that policy-driven market access via trade agreements induces firms to pursue more capital-intensive entry mechanisms to secure their long-term commitment to the foreign market.

Table 1. Comparison of FDI Rates among Firms with and without Trade Agreements

As shown in Table 1, industries such as pharmaceuticals and technology exhibit the highest FDI rates among firms operating under trade agreements, suggesting that industries with high regulatory demands benefit most from policy simplifications. The data reinforces that trade agreements serve as a significant enabler of deeper market integration and higher levels of foreign investment, incentivizing firms to undertake high-commitment entry strategies.

4.2. Impact of Exchange Rate Fluctuations on Pricing and Investment Decisions

The research finds that exchange rate volatility strongly correlated with firms’ adoption of low-investment entry mechanisms like export-driven strategies or contractual arrangements rather than high-investment mechanisms like joint ventures or 100% subsidiaries. Firms that had significant exposure to currency risk preferred to continue a loose, low-capital presence abroad. This decision is consistent with the risk mitigation approach used by companies operating in markets with volatile currency dynamics. For example, in the emerging markets where rates can be very unpredictable, companies generally prefer export-based methods to minimize capital risk and respond to fluctuations [12]. These results make clear the need for flexibility; companies with flexible financial and pricing systems proved more resilient to currency risks when considering global expansion plans. In this regard, exchange rate stability is an important determinant for firms’ high- or low-commitment entry approaches: stable currencies facilitate long-term investment and volatile currencies facilitate flexibility.

4.3. Effects of Import-Export Restrictions on Competitive Strategy

The study revealed that businesses subject to steep import tariffs or stringent non-tariff barriers including quotas and licensing obligations were more likely to outsource production or source inputs locally to circumvent restrictive trade regimes. This change illustrates how import-export policies can be used to shape both organizational structures and competitive standing abroad. For instance, consumer goods companies that were restricted from imported goods in certain countries sought local alliances or local acquisitions in order to get up to date with the rules. Below is Table 2 showing how firms across industries changed supply chains and entry mechanisms in the face of import-export restrictions.

Table 2. Strategic Adjustments in Response to Import-Export Restrictions by Industry

Table 2 reveals an ad hoc adaptive response by industry: the most localized and localised sourcing is found in pharmaceuticals and manufacturing industries. These results indicate that draconian import-export controls force companies to try to minimise their impact on profits and remain competitive [13]. This strategic adaptation is consistent with the idea that import-export controls, although a barrier to entry, also lead businesses to reconfigure and domesticate their business to increase their resilience and agility in foreign markets.

All in all, Tables 1 and 2 give a good indication of how various economic policies from trade treaties to currency fluctuations and import-export controls shape companies’ actions and approaches in each sector. Such findings demonstrate that companies need to continually reorient their internationalisation strategy around changing global policy environments.

5. Conclusion

This research suggests that global economic policies play an important role in shaping corporate internationalisation efforts. A trade agreement encourages higher levels of foreign direct investment, offering market access advantages that push companies to high-commitment entry strategies. In contrast, the volatility of exchange rates forces companies to focus on low-capital entry plans, making financial flexibility critical to managing currency risks. Furthermore, import-export controls force companies to make domestic manufacturing and supply inputs, changing the ways that firms operate and position themselves in competitively tight markets. Such findings point to the need for flexible approaches that allow companies to act in tumultuous policy environments. As global economic policies continue to shift, companies that are ahead of the curve in adapting their strategies will have a greater chance of remaining resilient and gaining a competitive edge in international markets. These findings can be applied to help companies and government officials develop strategies and policies to encourage long-term global growth.

Authors’ Contributions

Jiaqi Liu and Yintian Yang have made equally significant contributions to the work and share equal responsibility and accountability for it.