Outward foreign direct investment from post-socialist to advanced economies: motives and determinants of Slovene investment in Germany

Abstract

PurposeLong regarded as a far-fetched notion, companies from post-socialist economies (PSEs) increasingly compete with companies from advanced economies in their domestic markets and abroad. This study identifies PSE companies' motives and determinants of outward foreign direct investment (OFDI) in advanced economies.Design/methodology/approach This study analyses Slovenian business activities in Germany by juxtaposing eight Slovenian investors and three exporters using a multiple case study approach. The authors use content analysis to examine rich data from semi-structured interviews, databases and internal and external documents to provide comprehensive and in-depth insights into PSE investments in advanced economies.FindingsThe authors identify market-seeking motives and competitive advantages which differ from those of other emerging economy companies and offer theoretical suggestions. In contrast to findings from other emerging economies, the authors identify firm- and country-specific advantages, such as high technology, high service quality, a highly educated labour force, and European Union membership, which Slovene companies have employed to enter the advanced German market.Originality/valueThis study represents the first application of springboard theory to explain PSE company investment in advanced economies. The authors offer contextualised explanations of PSE investments in advanced host economies, which have been lacking thus far. The authors also contribute to the scarcity of studies on the effects of supranational institutions on OFDI from emerging economies.

Sustainable digital transformation path for manufacturing outwards foreign direct investment firms: Gradual or leapfrogging

“…From a broader perspective, factors at the national level can also exert an impact on a firm's outward foreign direct investment (OFDI) activities. For instance, firms like PSE are more inclined to leverage their technological, human, and political capital to engage in high-quality OFDI endeavors (see Hilger et al [ 25 ]).…”