Adventurous Foreign Direct Investment

Zdziarski Michał (), Światowiec-Szczepańska Justyna, Troilo Mike and Małys Łukasz
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Zdziarski Michał: University of Warsaw, Faculty of Management, 1/3 Szturmowa St., 02-678 Warsaw, Poland
Światowiec-Szczepańska Justyna: Poznan University of Economics and Business, Department of Strategic Management, Poznan, Poland
Troilo Mike: Collins College of Business, School of Finance, Operations Management and International Business, The University of Tulsa, Tulsa, Oklahoma, United States of America
Małys Łukasz: Poznan University of Economics and Business, Department of International Marketing, Poznan, Poland

Journal of Management and Business Administration. Central Europe, 2017, vol. 25, issue 2, 117-139

Abstract: Purpose: The aim of this paper is to explore the phenomenon of an advanced form of internationalization: foreign direct investment (FDI) in a distant location. We label this transaction “adventurous FDI, and explain how this new concept is related to, yet distinct from, other widely studied theories: born global companies, the LLL model, and the Uppsala model. We propose a theoretical typology of adventurous FDI based on two critical factors for risk-taking: distance and embeddedness. Methodology: We present a theoretical proposal of a typology of AFDIs. To support our proposal, we illustrate the typology with examples from a longitudinal study of foreign direct investments undertaken in the years 2007-2009 by Polish firms. Selection of the time period for this study is justified by the fact that the number of FDI transactions and AFDIs has almost doubled in the observed time period. We apply methods of social network analysis to identify embeddedness of FDIs and use geographic distance measures to classify transactions on a distance scale. Originality: Current theories of foreign direct investment (FDI) focus broadly on either gradual learning or instant globalization. We identify a new category which we term “adventurous FDI”. The distinctive features of adventurous FDI includes the exploration of many unknowns related to distant locations and the use of advanced internationalization forms. We propose that embeddedness in country networks is instrumental to adventurous FDI, as the rapid learning inherent in such network arrangements enables firms to overcome the ambiguity associated with vast geographic, psychic, and cultural distance.

Keywords: internationalization; foreign direct investment; distance; social network analysis; embeddeddness (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:jmbace:v:25:y:2017:i:2:p:117-139:n:7

DOI: 10.7206/jmba.ce.2450-7814.198

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