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

Abstract

Purpose

Long 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.

Findings

The 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/value

This 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.

Citation

Hilger, A.M., Nedelko, Z. and Steger, T. (2023), "Outward foreign direct investment from post-socialist to advanced economies: motives and determinants of Slovene investment in Germany", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-07-2022-1112