FDI Strategies in European Emerging Markets

Topics: Developed country, European Union, Investment Pages: 171 (47269 words) Published: October 20, 2011
FDI strategies in European emerging markets
The impact of host-country developments on post-formation FDI strategies

Maastricht University Faculty of Economics and Business Administration International Business, Strategy & Innovation

Document: Thesis report Date: Author: Supervisor: Amsterdam, March 14th, 2009 H.W.A. Canisius (i464635) Mr. W. Swaan

FDI strategies in European emerging markets
The impact of host-country developments on post-formation FDI strategies

I thank my parents, family and close friends for their moral support and constructive criticism during my studies in Amsterdam and Maastricht. I thank Marcel for letting me rent his nicely renovated and refurnished apartment while finishing my thesis. It provided a perfect work environment. I like to thank Mr. W. Swaan for supervising my thesis and his constructive criticism. The startup phase of my thesis has been quite challenging and his guidance supported me in making this thesis what it is. Last but not least, I would like to thank the interview candidates for their willingness to participate in this research and by providing the foundation for this thesis. I hope they enjoy reading it as much as I enjoyed writing it.

Hans Canisius



FDI strategies in European emerging markets
The impact of host-country developments on post-formation FDI strategies

Management summary
This thesis focuses on Foreign Direct Investment (FDI) strategies of developed European market firms in European emerging markets and aims to contribute to the existing knowledge on the evolution of post-formation FDI strategies in face of host-country developments. The literature review therefore addressed the wide variety of host-country conditions and identified institutional, network relations and competition related conditions as the most significant host-country aspects for post-formation FDI strategies. Each of these aspects has subsequently been explored in order to determine the circumstances in which certain developments can trigger the need or opportunity for FDI exit, reallocation or expansion strategies. A case study research among developed European market firms has been conducted to provide the necessary practical insights on the selected host-country developments, yet the response rate has unfortunately been insufficient to allow for any reliable conclusions on the existing literature. The case study findings do however provide support for various aspects in the literature and thereby indicate certain vital host-country developments for consideration for post-formation FDI in European emerging markets. Some examples of such developments are related to institutional stability and transparency, local competition and embeddedness in local network relations. This thesis furthermore identified other important considerations for post-formation FDI, like for instance the potential effect of labour market competition and the disappearance or reallocation of local markets, that were not addressed in the literature review. Besides this support for various developments addressed in the literature and other developments identified in the case study research, this thesis also resulted in three additional findings. First, European emerging markets can be considered attractive and still are becoming more attractive for FDI as these markets continue to develop and display increasing levels of stability and prosperity. Second, the EU or potential EU integration plays a significant role in the development of European emerging markets as it stimulates a.o. FDI inflows and the development of stable and transparent institutional conditions. Finally, both the literature and research findings emphasize the importance of a thorough FDI formation phase as well as continuously monitoring ongoing development during FDI projects. The impact of post-formation host-country development on FDI strategies is considered to diminish with increasing...

References: The impact of host-country developments on post-formation FDI strategies
Database sources: UNCTAD (2008), Interactive database: FDI Stat®, http://www.unctad.org/Templates/Page.asp?intItemID=3199&lang=1
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