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FDI entry strategies and the impacts of economic freedom distance: Evidence from Nordic FDIs in transitional periphery of CIS and SEE

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  • Arslan, Ahmad
  • Tarba, Shlomo Y.
  • Larimo, Jorma

Abstract

This paper addresses foreign direct investment (FDI) entry strategies of multinational enterprises (MNEs) by analysing both establishment mode (greenfield investment vs. acquisition) and ownership mode (wholly owned subsidiary vs. joint venture) strategies together. It contributes to extant IB literature by being one of the first to specifically address influences of economic freedom distance on both FDI establishment and ownership mode strategies of MNEs. The novel empirical sample consisting of 348 FDIs made by 146 Nordic (Denmark, Finland, Norway and Sweden) MNEs in the less researched transitional periphery of the European Union (EU), i.e. Common Wealth of Independent States (CIS) and South-Eastern Europe (SEE), during 1990–2009 further enhances the contribution of our study. The study results revealed that high economic freedom distance leads to preference of greenfield investments and JVs by Nordic MNEs in the full sample. Further in depth analysis by dividing the sample into FDIs in the Russian Federation vs. other host economies lead to more interesting insights into the establishment and ownership mode strategies of Nordic MNEs.

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  • Arslan, Ahmad & Tarba, Shlomo Y. & Larimo, Jorma, 2015. "FDI entry strategies and the impacts of economic freedom distance: Evidence from Nordic FDIs in transitional periphery of CIS and SEE," International Business Review, Elsevier, vol. 24(6), pages 997-1008.
  • Handle: RePEc:eee:iburev:v:24:y:2015:i:6:p:997-1008
    DOI: 10.1016/j.ibusrev.2015.03.004
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    1. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    2. Maria Elo, 2016. "Typology of diaspora entrepreneurship: Case studies in Uzbekistan," Journal of International Entrepreneurship, Springer, vol. 14(1), pages 121-155, March.

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