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Determinants of MNE Activity in Poland: The Case of Firms from EU-15

Andrzej Cieślik ()

Entrepreneurial Business and Economics Review, 2017, vol. 5, issue 1, 151-167

Abstract: Objective: The main purpose of this paper is to validate empirically the theoretical predictions of the modified knowledge capital model of multinational enterprise and identify the main reasons for undertaking international production in Poland by foreign firms from the EU-15 countries. Research Design & Methods: Our theoretical framework refers to the physical capital augmented knowledge capital model that combines both horizontal and vertical reasons for foreign direct investment. The empirical implementation of the theoretical framework is based on the negative binomial model and the bilateral dataset covering 15 old EU member states over the period 1989-2014 which yields a total of 390 observations. Findings: Our estimation results indicate that the extent of multinational activity in Poland is positively related to both differences in relative factor endowments and similarity in the relative country size which confirms the importance of both reasons for undertaking foreign direct investment in Poland. Implications & Recommendations: The empirical evidence confirms the predictions of the modified knowledge capital model and points to the horizontal as well as vertical motives for undertaking foreign direct investment in Poland. These findings suggest that government should not try to attract only one type of FDI. Contribution & Value Added: The originality of this work lies in the empirical implementation of the theoretical framework that allows distinguishing between horizontal and vertical reasons for foreign direct investment.

Keywords: count data; European Union; foreign direct investment; negative binomial model; multinational enterprises; Poland (search for similar items in EconPapers)
JEL-codes: F14 P33 (search for similar items in EconPapers)
Date: 2017
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Entrepreneurial Business and Economics Review is currently edited by Krzysztof Wach, PhD, hab.

More articles in Entrepreneurial Business and Economics Review from Centre for Strategic and International Entrepreneurship of the Faculty of Economics and International Relations at the Cracow University of Economics. EBER Journal Cracow University of Economics Faculty of Economics and International Relations Centre for Strategic and International Entrepreneurship ul. Rakowicka 27 31-510 Krakow Poland. Contact information at EDIRC.
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