The OLI theory suggests that when companies leverage Ownership specific advantages (O), Location advantages (L), and Internalization advantages (I) together they gain an advantage from FDI. Both Ford and GM, through whole ownership or JV partnerships, utilize their technology, process, and management capabilities to create a competitive advantage over domestic companies. Such MNCs still have to operate and compete within a business environment having market imperfections, caused in part, by the government’s attitude towards FDI. Many members of the Duma view FDI as an attempt by MNCs to rob Russia of its riches by transferring the wealth abroad.

Political mistrust causes delays in making legislative changes to both the legal and financial system considered necessary to make the market more efficient and attractive for FDI. Political concerns had a direct bearing on GM’s JV with AvtoVAZ, as the government had decided against the sales of shares of AvtoVAZ to a single outside investor. Hence, GM’s JV with AvtoVAZ is restricted to a 41.5% ownership stake, while AvtoVAZ is free to form additional partnerships with other automotive companies such as Korea’s Daewoo. In spite of market inefficiencies caused by inadequate infrastructure, a poorly functioning legal system, a criminalized business environment, and awesome bureaucracy, both Ford and GM view the business rewards for FDI outweighing the risks. While Russia continues to offer great potential for FDI, its internal market imperfections could be a key reason why it was able to only attract an estimated FDI inflow of $5.2 billion out of the global $653 billion FDI flows into major economies in 2003.