Analysis of the investment activity in south and central eastern europe: A comparative analysis of the corporate growth model

Abstract

With the opening up of the South and Central Eastern European markets in the early 1990s, foreign firms grabbed the opportunity to exploit their ownership advantages and expand abroad. Within this context, the primary aim of this study is to test the impact of ownership and location advantages in determining the internalisation decisions by foreign investors. The theoretical part will present a framework for explaining the strategic aspects of the internationalisation process, by integrating the resource based theoretical approach, which examines inter- alia ownership resource requirements, and the transaction costs approach, which involves examining variables relating to internalisation control and resources costs. The framework is then applied to the empirical examination of various aspects of the internationalisation process of foreign companies in the region. These break down into three main areas: the internationalisation decision itself; the entry mode strategies; and the implications for performance in terms of profitability.