Spatial diffusion of Asian direct investments in the northern European EU countries
- DOI
- 10.5922/2079-8555-2021-4-2
- Pages
- 21-35
Abstract
The first publications on the spatial diffusion of foreign direct investment (FDI) appeared in the 1970s-1990s. Since then, many of their provisions have been repeatedly criticised as outdated and inconsistent with empirical evidence of the current stage of globalisation. Previously, only examples of ‘newcomers’ to internationalisation were used to illustrate distinct phases in the expansion of transnational companies and their effort to first establish themselves in major economic centres, as the factor of gradually growing awareness of potential investors began to play an important role. This article aims to show the persistent character of FDI spatial diffusion patterns and their correlation with the existing hierarchy of cities. In our research, we used the example of Asian companies working in the Baltic states, Finland, Sweden and Denmark, newcomers to internationalisation, not affected by the ‘neighbourhood effect’, and contrasted them with Western European investors. We confirmed the validity of the hierarchical wavelike model of the FDI spatial diffusion with the dominance of metropolitan urban agglomerations. It was also found that mergers and acquisitions are dominant forms of FDI in developed countries. Their ascendancy leads both to a distortion of the geographical pattern of subsidiaries networks of investor companies and to the intention of investors to sell their assets in provinces and move their head offices closer to capital cities. Consequently, there is a simplification of the structure of businesses, which is typical of the earlier stages of the FDI spatial diffusion.
Reference
1. Gurova, I.P. 2019, Regional Distribution of Foreign Direct Investment in Russian Economy, Region: ekonomika i sotsiologiya [Region: Economy and Sociology], no. 3, p. 216—239. doi: https://doi.org/10.15372/reg20190309 (in Russ.).
2. Kuznetsova, O.V. 2016, The Role of Foreign Capital in the Economies of Regions of Russia: Possibilities of Assessments and Interregional Differences, Studies on Russian Economic Development, vol. 27, no. 3, p. 276—285. doi: https://doi.org/10.1134/S1075700716030096.
3. Rastvortseva, S.N., Ternovskiy, D.S. 2016, Concentration factors in economic activities in Russian regions, Ekonomicheskiye i sotsial’niye peremeni: fakti, tendentsii, prognoz [Economic and Social Changes: Facts, Tendencies and Outlook], no. 2, p. 153—170. doi: https://doi.org/10.15838/esc.2016.2.44.9 (in Russ.).
4. Kuznetsov, A.V. 2016, Framework for the analysis of geography of transnational corporations investments abroad, Balt. Reg., vol. 8, no. 3, p. 22—32. doi: https://doi.org/10.5922/2079-8555-2016-3-2.
5. Hotelling, H. 1929, Stability in Competition, The Economic Journal, vol. 39, no. 153, p. 41—57.
6. Vernon, R. 1999, The Harvard Multinational Enterprise Project in historical perspective, Transnational Corporations, vol. 8, no. 2, p. 35—49.
7. Vaupel, J.W., Curhan, J.P. 1969, The Making of Multinational Enterprise: A Sourcebook of Tables Based on a Study of 187 Major U.S. Manufacturing Corporations, Boston, Harvard Business School Press, xxiv, 511 p.
8. Davidson, W.H. 1980, The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects, Journal of International Business Studies, vol. 11, no. 2, p. 9—22.
9. Kuznetsov, A.V. 1999, Germany: current specifics of foreign direct investment geography, Voprosi ekonomicheskoy i politicheskoy geografii zarubezhnih stran [Questions of Economic and Political Geography of Foreign Countries], no. 14, p. 69—81, available at: http://www.geogr.msu.ru/cafedra/segzs/nauchd/pubs/Voprosy%20zarubejki%2014.pdf) (in Russ.) (accessed 16.07.2021).
10. Johanson, J., Vahlne, J.-E. 1977, The Internationalization Process of the Firm — A Model of Knowledge Development and Increasing Foreign Market Commitments, Journal of International Business Studies, vol. 8, no. 1, p. 23—32.
11. Håkanson, L. 1979, Towards a Theory of Location and Corporate Growth. In: Hamilton, F.E.I., Linge, G.J.R. (eds.) Spatial analysis, industry and the industrial environment, Chichester & New York, Wiley, p. 115—138.
12. Rennie, M. 1993, Born Global, McKinsey Quarterly, no. 4, Autumn, p. 45—52.
13. Oviatt, B.M., McDougall, P.Ph. 1994, Toward a Theory of International New Ventures, Journal of International Business Studies, vol. 25, no. 1, p. 45—64.
14. Øyna, S., Alon, I. 2018, A Review of Born Globals, International Studies of Management & Organization, vol. 48, no. 2, p. 157—180. doi: https://doi.org/10.1080/00208825.2018.1443737.
15. Deng, Z., “Bryan” Jean, R.-J., Sinkovics, R.R. 2018, Rapid expansion of international new ventures across institutional distance, Journal of International Business Studies, vol. 49, no. 8, p. 1010—1032. doi: https://doi.org/10.1057/s41267-017-0108-6.
16. Johanson, J., Vahlne, J.-E. 2009, The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership, Journal of International Business Studies, vol. 40, no. 9, p. 1411—1431.
17. Håkanson, L., Kappen, P. 2017, The ‘Casino Model’ of Internationalization: An Alternative Uppsala Paradigm, Journal of International Business Studies, vol. 48, no. 9, p. 1103—1113. doi: https://doi.org/10.1057/s41267-017-0113-9.
18. Schlunze, R.D. 1992, Spatial Diffusion of Japanese Firms in West Germany and West Berlin from 1955 to 1989, Geographical Review of Japan. Series B, vol. 65, no. 1, p. 32—56.
19. Kuznetsov, A.V., 2002, Territorial development of firms as a cause of interregional contrasts in intensity of foreign economic relations, Nauchniye trudi Instituta ekonomiki perekhodnogo perioda [Proceedings of IEP], no. 38R, p. 8—44, available at: https://www.iep.ru/files/text/working_papers/38.pdf (in Russ.) (accessed 16.07.2021).
20. Kumar, K., McLeod, M.G. (ed.). 1981, Multinationals from Developing Countries, Lexington (MA) & Toronto: LexingtonBooks, xxvi, 213 p.
21. Sauvant, K.P. (ed.) 2008, The Rise of Transnational Corporations from Emerging Markets: Threat or Opportunity? Cheltenham & Northampton (MA), Edward Elgar, хxii, 391 p.
22. García-Lillo, F., Claver, E., Marco-Lajara, B., Seva-Larrosa, P., Ruiz-Fernández, L. 2021, MNEs from emerging markets: a review of the current literature through “bibliographic coupling” and social network analysis, International Journal of Emerging Markets, vol. 16, no. 8, p. 1912—1942. doi: https://doi.org/10.1108/IJOEM-03-2019-0170.
23. Buckley, P.J. et al. 2010, Foreign Direct Investment, China and the World Economy, Chippenham and Eastbourne, Palgrave Macmillan, xii, 433 p.
24. Kim, J.-Y. 2017, The Evolution of South Korean outward FDI: Internationalisation Strategies, FDI motives, and Location Choice, PhD Thesis, Warwick, University of Warwick, 125 p., available at: http://wrap.warwick.ac.uk/98021/1/WRAP_Theses_Kim_2017.pdf (accessed 16.07.2021).
25. Saikia, M. 2020, Location Determinants of Indian Multinationals: A Multilevel Analysis, Global Business Review, vol. 21, no. 5, p. 1200—1217. doi: https://doi.org/10.1177/0972150919857014.
26. Stallkamp, M., Pinkham, B.C., Schotter, A.P.J., Buchel, O. 2018, Core or periphery? The effects of country-of-origin agglomerations on the within-country expansion of MNEs, Journal of International Business Studies, vol. 49, no. 8, p. 942—996. doi: https://doi.org/10.1057/s41267-016-0060-x.
27. Kaartemo, V. 2007, The Motives of Chinese Foreign Investments in the Baltic Sea Region, Electronic Publications of Pan-European Institute, no. 7, 120 p., available at: https://www.utu.fi/sites/default/files/media/Kaartemo_72007.pdf) (accessed 16.07.2021).
28. Kalendienė, J., Pukelienė, V., Dapkus, M. 2017, Chapter 4: Nordic-Baltic Countries and China: Trends in Trade and Investment. In: Larçon, J.-P. (ed.) The New Silk Road: China Meets Europe in the Baltic Sea Region, Singapore, World Scientific, p. 77—103. doi: https://doi.org/10.1142/9789813221819_0004.
29. World Investment Report 2021: Investing in Sustainable Recovery, 2021, Geneva, UNCTAD, xvi, 270 p.
30. Sauvant, K.P., Govitrikar, V.P., Davies, K. (ed.) 2011, MNEs from Emerging Markets: New Players in the World FDI Market, New York, VCC, xxi, 397 p., available at: https://ccsi.columbia.edu/sites/default/files/content/docs/publications/EMGP_-_eBook_PDF_2_11.pdf) (accessed 16.07.2021).