Foreign Investors – Friends or Enemies of Domestic Entrepreneurs?

Abstract

Besides the well-known factors that affect entrepreneurship: economic and technological development, culture and education, FDI should also be considered as an important factor for entrepreneurial development of a host country. Having that in mind, the aim of this paper is to analyze how FDI may affect the host country's entrepreneurial activity, through a literature review. In some of the analyzed papers foreign investors are seen as friends of the host country's entrepreneurship thanks to the capital inflows, know-how, managerial capacity and employment growth, but in some other papers are seen as enemies, owing to increasing import competition and discouraging domestic entrepreneurs. The main contribution of this paper is compressing into a single material an overview of the friendly and unfriendly based effects of FDI on the host country's entrepreneurship.