Multinational Strategy and Industrial Transformation

That ‘the role of foreign direct investment in aiding the regeneration of the shattered economies of East and Central Europe’ (Buckley, 1996) was an important early perception of the debate following the collapse of authoritarian centrally-planned regimes is well-understood. Indeed documentation and analyses of foreign direct investment (FDI) contributed significantly to the preliminary elaboration of these concerns. We argue here, however, that (mirroring the crucial refocusing of analytical context pioneered by Hymer [1960/1976]) the relevance of FDI flows to the processes at issue can only be fully comprehended through an understanding of the strengths and motivations of the agents responsible for them, that is multinational enterprises (MNEs). The strategic roles played by MNEs’ operations in transition economies are here viewed as central to the nature of their contribution to the industrial restructuring necessary in these countries. The increasingly heterogeneous nature of the globalized activity of MNEs emphasizes the range of these potential roles, and therefore the crucial importance to host countries of the types of operations they can attract.