Darwinism and MNE tax avoidance


We argue that the profit creation runs in the genes of firms, and the conflict of profit genes and Darwinian fitness may be considered for policymaking on the tax-avert MNE behaviour.


Project background and aims

The project aims to trace biological nature of firm organization and investigates Darwinian rationale in the cost-induced behaviour of multinational enterprise (MNE), presuming taxes as its business costs. Despite the fact that organizational science is acknowledged as an inherently interdisciplinary field it rarely transplants insights from biology. The project aims to undertake this task in express terms. Business organizations struggle and compete to maximize profits as do living organisms for resources for survival. Based on the Friedmannian thesis that the sole purpose of firms is to maximize profits, it could be posited that the process of profit creation “runs in the genes” of business organizations.

In that framework, costs of a firm should be potentially in conflict with its profit genes and Darwinian fitness. If tax is a business cost, is Darwinian rationale also at work in the organizational behavior in the MNEs which operate transnationally across borders where country to country tax costs may vary significantly?

If the profit gene model and the ensuing Darwinian rationale holds in the cost-induced behaviour of business organizations, it poses policymaking challenges in dealing with MNEs since hardly any global policy regime at present considers the underlying genetic evolutionary construct of MNEs. To that end, the project dissects the case of business organization as a Darwinian entity and the genetic foundations of MNEs tax avoidance behaviour to explore its policy implications.


The project uses interdisciplinary methodological tools at the interface of biology, organisational science, economics and tax policymaking. In examining the biological nature of business organizations, the study employs tools of analogical reasoning based on the economics of the nature of firm and organizational ecology. In exploring the cost induced dynamics of firms, we advance a profit-genes model to dissect the tax avert behaviour of MNEs. To investigate the policy implications of anti-avoidance genetic MNE behaviour, we apply the Tinbergenian behavioral rationale of proximate and ultimate causation.