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

Jorma Larimo and Ahmad Arslan

Journal of East European Management Studies, 2013, vol. 18, issue 2, 232-263

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.

Keywords: Central and Eastern Europe; Foreign Direct Investments; Ownership Mode Choice; and Nordic Firms (search for similar items in EconPapers)
JEL-codes: F21 F23 L21 L22 L26 P30 P31 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:rai:joeems:doi_10.1688/1862-0019_jeems_2013_02_larimo