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Determinants of foreign direct investment ownership mode choice: Evidence from Nordic investments in Central and Eastern Europe

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  • Larimo, Jorma
  • Arslan, Ahmad

Abstract

This paper addresses the determinants of foreign direct investment (FDI) ownership mode choice of firms in Central and Eastern Europe (CEE) based on three most important theoretical paradigms of IB studies i.e. transaction cost economics, resource based view and institutional theory. The empirical analysis of 720 FDIs made by the firms from all four Nordic countries in CEE region during 1990-2007 revealed that the probability WOS formation was increased by the high R&D intensity of the industry of the investment, low target country risk, large economic size and high economic growth in the target country. The further in-depth analysis revealed that for FDIs made during 1990s, product diversity; while for FDIs made during 2000s, international experience and strength of market conforming values in the target country became significant determinants of ownership mode choice for Nordic FDIs.

Suggested Citation

  • Larimo, Jorma & Arslan, Ahmad, 2013. "Determinants of foreign direct investment ownership mode choice: Evidence from Nordic investments in Central and Eastern Europe," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 18(2), pages 232-263.
    • Handle: RePEc:rai:joeems:doi_10.1688/1862-0019_jeems_2013_02_larimo
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    Citations

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    Cited by:

    1. Arslan, Ahmad & Tarba, Shlomo Y. & Larimo, Jorma, 2015. "FDI entry strategies and the impacts of economic freedom distance: Evidence from Nordic FDIs in transitional periphery of CIS and SEE," International Business Review, Elsevier, vol. 24(6), pages 997-1008.
    2. Jaworek, Małgorzata & Karaszewski, Włodzimierz & Szałucka, Małgorzata, 2021. "Ownership-Based Entry Mode Strategies and Limiting Factors of Foreign Direct Investment Undertaken by Polish Enterprises," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 26(3), pages 440-468.
    3. Luís Pacheco & Carla Lobo & Isabel Maldonado, 2022. "The Presence of Foreign Capital and the Internationalization of Portuguese Industrial SMEs," JRFM, MDPI, vol. 15(2), pages 1-18, February.
    4. Chenxi Wan & Carlos M. P. Sousa & Jorge Lengler & Qun Tan, 2023. "Entry Mode Choice: A Meta-Analysis of Antecedents and Outcomes," Management International Review, Springer, vol. 63(2), pages 193-246, April.
    5. 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.
    6. Krzysztof Wach, 2017. "Exploring the Role of Ownership in International Entrepreneurship: How does Ownership Affect Internationalisation of Polish Firms?," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(4), pages 205-223.

    More about this item

    Keywords

    Central and Eastern Europe; Foreign Direct Investments; Ownership Mode Choice; and Nordic Firms;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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