Multinational Enterprise Adaptation to Mandatory Due Diligence: Extending the OLI Paradigm Through Institutional Integration

ABSTRACT Mandatory due diligence regulations require multinational enterprises to ensure accountability across global value chains, yet existing theoretical frameworks do not adequately explain how firms adapt to these obligations. We address this gap by extending the OLI paradigm into regulation‐driven contexts, reconceptualising each advantage type for mandatory due diligence and integrating institutional theory to specify the pressures that activate them across four organizational layers. The Integrated OLI ‐Institutional Framework operationalizes this extension as a 36‐code analytical matrix. Regulatory Absorptive Capacity is introduced as a dynamic capability that operationalizes the institutional sub‐component of Ownership (Oi). The application to 983 organizational actions from 11 MNEs illustrates how the extended framework reveals structural convergence in formal governance coexisting with operational divergence and surfaces distinct strategic archetypes. The framework proposes Architectural Control as a distinct governance mode—theoretically specified as compliance gated through platform rules rather than through contractual authority—and the data are consistent with platform MNEs deploying it. The extension contributes to IB theory by giving the OLI paradigm traction in a regulatory domain it has not previously addressed; the matrix is a derivative methodological tool, and its diagnostic use by practitioners is a further secondary application.