Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments

During the last two decades Greece has emerged as a key regional player and one of the largest investors in the Central and Eastern and South-Eastern European Countries (CESEE) [Bastian, J. (2004). Knowing your way in the Balkans: Greek foreign direct investment in Southeast Europe. Southeast European and Black Sea Studies, 4(3), 458-90; Demos, A., Filippaios, F., & Papanastassiou, M. (2004). An event study analysis of outward foreign direct investment: The case of Greece. International Journal of the Economics of Business, 11(3), 329-48; Kekic, L. (2005). Foreign direct investment in the Balkans: Recent trends and prospects. Southeast European and Black Sea Studies, 5(2), 171-90]. With the opening up of neighbouring markets in the early 1990s the Greek firms and entrepreneurs 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 Greek investors participating in the Athens Stock Exchange (ASE), proving that Dunning's eclectic paradigm (OLI) is a holistic, yet context specific framework of analysing foreign direct investment (FDI) determinants. To set the OLI in a specific context, we account for the different sectors and countries where Greek companies have internationalised, as well as for the time period when investments have been made. This paper's second major contribution is that by looking at both ownership advantages and institutional determinants it complements the previous works on institutional determinants of FDI. Our findings show that the expansion of Greek firms occurs primarily in similar countries with small market size, and open economies. Rule of law and high bureaucratic quality remain essential for the firm's decision whereas the existence of high corruption act as a deterrent. Finally, a significant finding is that of the existence of a learning curve in the Greek firms' international expansion.