Limiting Factors of Foreign Direct Investment Undertaken By Polish Enterprises

Abstract

Limiting factors of foreign direct investment are of great significance for managers, governments, and scholars as they directly influence the profitability of a foreign subsidiary and a parent multinational company. The aim of the paper is to identify FDI limiting factors of host country location choices among Polish enterprises and differences in the perception of the factors depending on the establishment mode choice, i.e. whether it is through greenfield investments or acquisitions. The paper presents results of a field surveyed carried out in 2012–2013 among Polish companies. The research results revealed that regardless of the establishment mode choice, investors from Poland perceived market-related limiting factors as significant. The empirical findings also proved that there were no significant differences in the perception of the importance of FDI limiting factors, between investors who undertook acquisitions and those who decided to make greenfield investments. However, single cases of differences were identified at the level of the policy framework-related factors.

Keywords:

• Acquisition
• establishment mode choice greenfield
• FDI limiting factors
• foreign direct investment

JEL Classification:

• F21
• F23

Notes

Notes

1 The authors’ intention was to invite all Polish direct investors to participate in the study. However, only the National Bank of Poland (NBP) and the Main Statistics Office (GUS) has access to this data in Poland. After the initial declaration from the NBP, the bank eventually refused to share their database saying this would have been in breach of Art. 23 Section 5-7 of the National Bank of Poland Act of 29 August 1997 (Journal of Law from. 2005. No 1, Point 2). The GUS has also refused to share these details using similar arguments. The researchers commenced work with verifying a database of foreign investors received from the NBP, which had been used by the team in their earlier study carried out between 2007 and 2008. Then, they addressed 2000 largest enterprises in Poland via the Internet and asked if they operated abroad. The research team used a custom made tool, which enabled them to conduct this poll. They also started a very time-consuming study of the information available on company websites of each of the 2000 largest enterprises, entries in the National Court Register and all sorts of reports. As a result of this work and the data collected from the Ministry of Economy, Departments for Trade and Investment Promotion at Polish embassies, Polish Information and Foreign Investment Agency, the researchers created a database including contact details of 622 Polish enterprises which had carried out FDI projects.

2 The indicator is provided in the range from 0 – high corruption, up to 100 – full transparency.