Understanding the Strategic Motivations of Finnish Manufacturing FDIs in Emerging Asian Economies
- PDF / 160,315 Bytes
- 21 Pages / 442 x 663 pts Page_size
- 38 Downloads / 161 Views
Understanding the Strategic Motivations of Finnish Manufacturing FDIs in Emerging Asian Economies Rizwan Tahira and Jorma Larimob a
Department of International Business, University of Auckland, Private Bag 92019, Auckland, New Zealand. E-mail: [email protected] b Department of Marketing, University of Vaasa, P.O. Box 700, Vaasa FIN-65101, Finland. E-mail: [email protected]
The purpose of this paper is to empirically investigate how ownership-specific, location-specific, internalization and strategic advantages have influenced the location strategies of Finnish firms in 10 South and Southeast Asian countries from 1980 to 2000. Despite the increased interest in foreign direct investments (FDIs), very few studies have been undertaken to empirically analyse influential ownershipspecific, location-specific and internalization (OLI) variables together with strategic advantages in order to assess FDI decision-making among foreign investors. To the best of our knowledge, strategic motives particularly have remained primarily anecdotal. This paper is apparently the first attempt to analyse how the above OLI advantages have influenced Finnish manufacturing firms in Asian countries. The research results indicate that large parent firm size, large international experience, large market size in the target country, low cultural distance and low wage rates increase the probability of market-seeking and efficiency-seeking FDIs. It has also been found that low levels of inflation, low levels of risk and a high level of exchange rate fluctuation in the target country increase the probability of riskreduction seeking FDIs. Finally, the results show that high R&D intensity in the parent firm increases the probability of knowledge-seeking FDIs in Asian countries. Asian Business & Management (2005) 4, 293–313. doi:10.1057/palgrave.abm.9200133 Keywords: FDI (FDIs); eclectic paradigm; location strategies; strategic motives; Asian countries
Introduction In Asia, foreign direct investment (FDI) has increased significantly over the past four decades. The awakening of South Korea and Taiwan, which further accelerated the growth of entire region, followed Japan’s transformation from Received 10 January 2004; revised 18 October 2004; accepted 31 January 2005
Rizwan Tahir and Jorma Larimo FDIs in Emerging Asian Economies
294
post-war ruin into economic superpower. In the 1970s and early 1980s rising foreign investment and deregulation in Indonesia, Malaysia and Thailand spurred this momentum, with the entrepreneurial city-states of Singapore and Hong Kong acting as the region’s growth poles. China’s tentative opening to the West in 1979, followed by its bold free market reforms in the late 1980s, led to unprecedented economic growth rates in the 1990s. According to the World Bank, by 2020 seven of the 10 largest economies on the planet will be in Asia, compared with only three out of 10 in 1997. Together, these countries form the Asian region, a formidable force that is drawing in the residual non-capitalist economies of Vietnam an
Data Loading...
