The mediation role of companies’ dynamic capabilities for business performance excellence: insights from foreign direct investments. The case of transitional partnership

Abstract

This study uses a combination of multinational enterprises and dynamic capabilities perspectives to illustrate how the involvement of foreign investors is able to contribute to a company’s corporate performance. Using Russian companies as an empirical sample and applying PLS-SEM, we test hypotheses regarding the impact of dynamic capabilities in terms of absorptive, adaptive, and communicative capabilities, on the relationship between foreign ownership and performance. Findings indicate that dynamic capabilities fully mediate the process of foreign direct investments transformation into firm’s results. Our findings contribute to the understanding of the mechanism by which dynamic capabilities enhance the positive effects of foreign direct investments on business performance, and advance the theoretical understanding of how a dynamic capabilities concept could be incorporated into multinational enterprises theory in the framework of relationships between companies from economies with different knowledge endowment.

Keywords:

• Dynamic capabilities
• foreign ownership
• economic value added (EVA)
• PLS approach
• Russia