Determinants of MNE Activity in Poland: The Case of Firms from EU-15

Abstract

A B S T R A C T Objective:The main purpose of this paper is to validate empirically the theoretical predictions of the modified knowledge capital model of multinational enterprise and identify the main reasons for undertaking international production in Poland by foreign firms from the EU-15 countries. Research Design & Methods: Our theoretical framework refers to the physical capital augmented knowledge capital model that combines both horizontal and vertical reasons for foreign direct investment. The empirical implementation of the theoretical framework is based on the negative binomial model and the bilateral dataset covering 15 old EU member states over the period 1989-2014 which yields a total of 390 observations. Findings: Our estimation results indicate that the extent of multinational activity in Poland is positively related to both differences in relative factor endowments and similarity in the relative country size which confirms the importance of both reasons for undertaking foreign direct investment in Poland. Implications & Recommendations:The empirical evidence confirms the predictions of the modified knowledge capital model and points to the horizontal as well as vertical motives for undertaking foreign direct investment in Poland. These findings suggest that government should not try to attract only one type of FDI. Contribution & Value Added: The originality of this work lies in the empirical implementation of the theoretical framework that allows distinguishing between horizontal and vertical reasons for foreign direct investment. Article type: research paper

What attracts multinational enterprises from the new EU member states to Poland?

“…4 However, the empirical evidence for individual CEECs is more scarce. In particular, determinants of MNE activity in Poland were studied by Torrisi et al (2009) and Cieślik (2017). However, with the exception of the recent study by Cieślik (2017), which focused on FDI from the old EU-15 member states, the previous studies made no attempts to validate empirically the predictions derived from the modern MNE theories and discriminate between competing theoretical models of multinational enterprise.…”

Analysis of determinants of the inflow of foreign direct investment to Poland. Part I – theoretical considerations

“…The fi rst stage in analyzing the motives of foreign investors was their identifi cation based on the literature and distinguishing specifi c groups of themes among them. The subsequent stage focused on determining the causeand-effect relationship between the scale of infl ow of foreign direct investment (response variable) and selected macroeconomic parameters of the economy (explanatory variables) (Markowicz, Miłaszewicz, 2007;Cieślik, 2017a).…”

Determinants of foreign direct investment from OECD countries in Poland

“…The empirical studies for individual CEECs are more scarce. In particular, determinants of MNE activity in Poland were studied by Torrisi et al (2009) and more recently by Cieślik (2017Cieślik ( , 2019a.…”

“…However, with the exception of the recent studies by Cieślik (2017Cieślik ( , 2019a, who used the number of firms with foreign capital participation as a proxy for the extent of MNE activity, the majority of previous studies made no attempts to test empirically the predictions derived directly from the NTMNE and differentiate between competing theoretical models. Hence, in contrast to the previous studies for Poland that used the number of firms with foreign capital participation as a dependent variable in this study, we use the actual data on the foreign direct investment position collected from the annual reports of the National Bank of Poland as a measure of inward FDI.…”