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Outsiders Response to Europe 1992: Theoretical Considerations and Empirical Evidence

Author

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  • Tamar Almor

    (Tel Aviv University)

  • Seev Hirsch

    (Tel Aviv University)

Abstract

This paper examines the response to the creation of the European Union by firms located outside the European Community that seek to serve its markets. Analysis of some of the major steps taken by the European Community to complete the internal market shows that the relative competitive position of outsiders is expected to deteriorate, even if the concept of “Fortress Europe” is rejected by the Community.Outsider firms can neutralize some of the disadvantages they encounter by engaging in foreign direct investment in the European Community which transforms them, in some sense, into insiders. This paper outlines a model that distinguishes between the expected investment behavior of producers of different kinds of goods. Distinction is made between Heckscher-Ohlin goods (H-goods), characterized by publicly available technologies, and Schumpeter goods (S-goods), based on firm-specific knowledge. Analysis of recent foreign direct investment by Israeli firms in the European Community and in other parts of the world shows that patterns of actual flows by sector, by geographic region and over time, correspond to predictions derived from the model.© 1995 JIBS. Journal of International Business Studies (1995) 26, 223–237

Suggested Citation

  • Tamar Almor & Seev Hirsch, 1995. "Outsiders Response to Europe 1992: Theoretical Considerations and Empirical Evidence," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(2), pages 223-237, June.
    • Handle: RePEc:pal:jintbs:v:26:y:1995:i:2:p:223-237
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    Citations

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    Cited by:

    1. Alvaro Cuervo-Cazurra & C. Annique Un, 2011. "Economic Integration and the Technological Capabilities of Domestic Firms," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume II, chapter 4, Edward Elgar Publishing.
    2. Cuervo-Cazurra, Alvaro & Un, C. Annique, 2007. "Regional economic integration and R&D investment," Research Policy, Elsevier, vol. 36(2), pages 227-246, March.
    3. Hashai, Niron & Almor, Tamar, 2004. "Gradually internationalizing 'born global' firms: an oxymoron?," International Business Review, Elsevier, vol. 13(4), pages 465-483, August.
    4. Jun, Jong-Kun & Hyun, Jae Hoon, 2014. "Anticipation or risk aversion? The effects of the EU enlargement on Korean trade and FDI activities in Central and Eastern Europe," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 19(4), pages 486-503.
    5. Tamar Almor & Shlomo Y. Tarba & Avital Margalit, 2014. "Maturing, Technology-Based, Born-Global Companies: Surviving Through Mergers and Acquisitions," Management International Review, Springer, vol. 54(4), pages 421-444, August.
    6. Almor, Tamar & Hashai, Niron, 2004. "The competitive advantage and strategic configuration of knowledge-intensive, small- and medium-sized multinationals: a modified resource-based view," Journal of International Management, Elsevier, vol. 10(4), pages 479-500.
    7. Tamar Almor & Niron Hashai & Seev Hirsch, 2006. "The product cycle revisited: Knowledge intensity and firm internationalization," Management International Review, Springer, vol. 46(5), pages 507-528, September.
    8. Buckley, Peter J. & Hashai, Niron, 2005. "Firm configuration and internationalisation: A model," International Business Review, Elsevier, vol. 14(6), pages 655-675, December.

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