Outward FDI from Hungary: the Emergence of Hungarian Multinationals

Hungary is a leading outward foreign investor among the new member states of the European Union. Our research question is what those factors are which enabled Hungarian companies to expand abroad successfully. Our methodology is based on company case studies of the leading investors and other randomly selected companies with foreign investment. Our main findings include the specific ownership advantages (OA) of privatised companies, with links to their heritage from the pre-transition period. For companies established after 1990, OA is more similar to that of “traditional multinationals.” Second, we make a link between “virtual indirect” investors and this specific OA, showing how the strong position and specific knowledge of the management are interrelated in developing and changing the OA. On the basis of our research, the policy dimension concerns, first of all, the role of increasing local competition due to increased investments by foreign multinationals. This enables a few local companies to enhance their level of competitiveness to such level where they themselves will be able to become successful foreign investors. Second, highly innovative companies in small market niches are able to internationalise successfully even in the post-transition environment. Fostering R&D is thus an important tool for trade and investment policy as well.