Nordic investments in the former soviet baltic frontier: a survey of firms and selected case studies

Abstract

Nordic companies have been leaders in the rapid expansion of Western business into Estonia, Latvia, Lithuania, and the St Petersburg area of Russia. While joint ventures were being developed prior to the demise of the USSR, investment rose sharply in early 1992. Our survey of companies from Nordic countries revealed a pattern of location and of adaptation to the conditions of former Soviet infrastructure, culture, politics and economy. Initial Nordic investment has renewed economic ties across the Baltic Sea, with inter‐country links stronger between specific countries. Frustrations with changing government rules, communications, work ethic, quality expectations and other conditions were expressed in interviews with managers of Nordic companies in the Baltic area. Optimism was tempered by continued uncertainty about Russian governmental policies and market potential.

Diaspora FDI: Why do Returning Migrants Invest in Their Home Countries and What are the Main Difficulties They Face? The Case of Romania

“…Investment environments in Central and Eastern Europe were considered particularly challenging, especially in the 1990s, due to their unpredictability (Marinov et al, 2003). Given the risk perception, most investors were guided by non-economic factors (such as the human and cultural similarity factor between their country and the host country) rather than by economic factors (the company's ownership advantages) when searching for a location for their investment (Altzinger, 1998;Bandelj, 2002;Gao, 2005;Johansen et al, 2000;Lu, 2012;Meyer, 1998;Paas & Scannell, 2001;and others). This trend confirms the validity of the internationalization theory, which stated that foreign direct investments are often motivated by historical and cultural ties between home and host countries rather than by economic efficiency (Johanson & Vahlne, 1977).…”

Technology-Intensive Fdi and Economic Development in a Small Country – The Case of Estonia

“…(Table 2) In the early 1990s privatisation was in Estonia one of the primary drivers of the inflow of FDIs and one of the most important sources of foreign exchange income, but over time market-seeking and Estonia's relatively less expensive production inputs (labour, energy, etc.) have become some of the main investment arguments (Varblane et al 2003, Varblane 2001, Johansen 2000.…”

Psychic distance effects for Russian market: Estonian and western experience

“…The potential of the Russian market in the light of the certain marketing specific factors can be examined and summarized around the following group of factors: (1) 58.8 Demand for products/services 3 Client-led demand, resources Labour and production cost b advantage in case of investment Attractive local market (2) 63 Well-trained, low cost workforce 37 Access to raw materials 19 Export facilities 15 Market entry decision is mainly affected by the client specific (public or private, international or domestic, reputation and financial status) and contract specific factors (3) Notes: a More than 40 new taxes were introduced in Russia in the period 1991-2000 (Executive Report on Strategies in Russia, 2000); b the production costs in Russia in some cases could be higher, that expected: "You can't get the stability of raw material quality from Russian suppliers, so you're paying very heavy transport costs, plus you have problems with customs clearance, so eventually you find that your costs are actually higher, that in western Europe", -interview with the representative of Henkel Technologies (Germany) (Russia, 2003) Source: Analysis of the author (based on Johansen, 2000;Russia, 2003;Fraser and Zarkada-Fraser, 2002) The factor of the natural local advantage is not significantly changing over time.…”

“…According to recent research the unique characteristics of the Russian market for investors were summarized as:Lacking public and private institutions, necessary for decreasing the uncertainty of business activity, local orientation, market turbulence, lack of wholesale and retail trade, lack of knowledge and entrepreneurial experience with market economy (Johansen et al , 2000). Political risk, as an “aggregate negative effect of governmental and societal actions and/or inertia on a select group or all foreign concerns operating in or wishing to penetrate a country's market” (Fraser and Zarkada‐Fraser, 2002).…”

“…Lacking public and private institutions, necessary for decreasing the uncertainty of business activity, local orientation, market turbulence, lack of wholesale and retail trade, lack of knowledge and entrepreneurial experience with market economy (Johansen et al , 2000).…”