MARTA GöTZ: Polish Foreign Direct Investment (FDI)

7/28/2019 MARTA GTZ: Polish Foreign Direct Investment (FDI)

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PRZEGLD ZACHODNI

2011, No 3

MARtA GtZPozna

Polish Foreign Direct investment (FDi)

the aricle aemps o presen he background for research ino Polish direc

invesmen aimed a foreign markes, he so-called ouward FDI

1

. the rs par ofhe aricle provides argumens jusifying he purposefulness of invesigaing PolishFDI and poins o a de facto dissonance which occurs beween he poor recogniionof he issue and is growing economic imporance. Nex, he mos imporan heoriesexplaining he ow of capial in he form of FDI are discussed and he possibiliy ofusing hem o analyze Polish invesmen is emphasized. Also, he resuls of selecedempirical sudies are presened.

the Inernaional Moneary Fund denes FDI as invesmen made in order oacquire paricipaion in managemen in an enerprise operaing in an economy oherhan ha of he invesor, wih he foreign invesor having he capaciy o effecively

paricipae in managemen. the lower limi marking he execuion of direc inves-men is a he range of 10 -25% of he voing share. In oher words, foreign direc in-vesmen includes, apar from he 100% ownership by a foreign invesor, commonlyoccurring join parnership (join venures), and long-erm inernal corporaion loansgiven by he paren company o is branch in anoher counry. Reinvesed pros arealso included in foreign direc invesmen. FDI can be also reaed as a form of capi-al impor. Generally, i can be dened as underaking from scrach independen eco-nomic aciviy abroad (greeneld) or aking over managemen in an already exisingenerprise via Merger & Acquisiions2. the inernaionally available publicaions are

dominaed by research ino invesmen from highly developed counries which isbeing direced o less afuen economies. FDI originaed in Poland is recognized assuch o a very small exen. this so far very poor invesigaion of Polish FDI is cer-ainly conneced wih he small scale of he phenomenon a he momen. However,he siuaion can soon change.

1 the lieraure search query was conduced wihin he projec of he Minisry for Science andHigher Educaion, Poles in Germany. Social, poliical, economic and legal aspecs.

2 A. Budnikowski,Midzynarodowe stosunki gospodarcze [International business relations], War-saw 1996, p. 144.


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taking up he issue is a resul of he presen sae of knowledge abou Polishenrepreneurship abroad, including he EU counries. Afer iniial reconnaissance ican be concluded ha research concerning his issue is no signicanly developed.

Ye, recognizing Polish enrepreneurship in he EU is of remendous cogniive im-porance in he conex of he prediced increase of FDI from Poland in he near fu-ure, as well as because of he growing expecaions of poenial invesors o receiveassisance in his maer from he Polish sae3.

According o he concep of he Invesmen Developmen Pah (IDP)4 everycounry a a cerain sage of evoluion changes from being a receiver of he capialino being a provider of he capial; i sends ou more capial han i receives. thus, ican be expeced ha ogeher wih he advancing modernizaion of he economy andhe expanding scope of paricipaion in he global nework i is also ahead of Poland5.As he sudy carried ou by he Insiue for Marke, Consumpion and Business Cy-cles Research showed he accession o he EU had a (psychologically) posiive inu-ence on he FDI iniiaive as, on he one hand, i raised he level of self-condenceand opimism among Polish enrepreneurs and, on he oher hand, i increased herus among he foreign parners6. the sudy a he same ime conrmed ha he FDI

by Polish companies is sill a he iniial sage of developmen.

3 W. Karpiska-Mizieliska, t. Smuga,Determinanty bezporednich inwestycji polskich przedsi-biorstw na rynkach zagranicznych [Determinants of direct investment by Polish enterprises in foreign

markets], Gospodarka Narodowa No. 9/ 2007 p. 31-51.4 J. Dunning, R. Narula, Foreign direct investment and governments: Catalyst for economic re-structuring, London, New York, Rouledge 1996, p. 1-9.

5 the graphic represenaion of he invesmen developmen pah is a coninuous line marking hene invesmen posiion of a counry, he so-called NOI (Ne Ouward Invesmen). In erms of arihme-ics i is he difference beween he gross ouward invesmen and he gross inward invesmen. the rssage of he invesmen developmen pah is characerized by he negaive gradien of he NOI curvewhich addiionally assumes negaive values. the locaion benes of such economy (apar from nauralresources) prove insufcien o arac foreign invesors. A he second sage he NOI curve sill as-sumes negaive values which shows he dominance of inward invesmen over ouward invesmen froma given counry, and he gradien of he curve iniially negaive (alhough less han in he rs sage) issaring o change ino posiive. A counry needs o have some desirable characerisics which ensure he

inow of invesors. the hird sage of he invesmen developmen pah is characerized by he posiivegradien of he NOI curve which iniially assumes negaive values o reach posiive values nex. thelocaion benes of an economy a his sage such as a large absorben marke, well developed infra-srucure and innovaive poenial enable he exernal effecs advanage, which aking ino accoun heincrease of paymens and producion facors aracs mainly echnologically advanced invesmen. thefourh sage of invesmen developmen pah is characerized by a posiive value of NOI and is clearlyposiive gradien. An economy a his sage of developmen ouward invesmen dominae over inwardinvesmen and his endency is growing which means ha he counry is a provider of ne invesmen.the las fh sage according o Narula and Dunning is open and unlimied wih he NOI curve havingboh posiive and negaive values (reecing he dominance of inward invesmen or ouward invesmenfor a paricular economy) and a posiive or negaive gradien. Evenually he curve ucuaes around he

line of balance (NOI=0), and he invesmen posiion of a counry oscillaes around zero.6 W. Karpiska-Mizieliska, t. Smuga, op.ci., p. 48.


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311Polish Foreign Direc Invesmen (FDI)

taking up he issue of Polish FDI also reecs he objecives of he foreign andeconomic policy of he Republic of Poland which are expressed, for example inhe sraegy of inernaionalizaion. the Minisry of Economy sees he insrumens

supporing he inernaionalizaion of Polish enerprises as an inegral par of heOperaional Program for Innovaive Economy and he Regional Operaional Pro-grams for he years 2007-2013. Increasing he presence of Polish enerprises in heinernaional marke is one of he prioriies of he economic policy of he govern-men in line wih he assumpions for he sraegy of promoing Polish economy

prepared by he Minisry of Economy. the Minisry sipulaed ha hrough hesraegy of inernaionalizing Polish economy 7 i wans o promoe he economy,ha is Polish business abroad, and no Poland as a brand name. the sraegy isfocused on aciviies which are supposed o resul in he growh of rade and inves-men, including Polish invesmen abroad. For he ime being however, here arearound 60 insiuions and ofces wih an annual budge of 100 million PLN whichdeal wih promoing he Polish economy is a manner which is no well coordinaedor very effecive8.

In inernaional publicaions concerning ouward FDI aenion has focused onanalyzing he consequences of he capial ouow for he whole counry economy.Special aenion is paid o he job marke, he impac on employmen and produciv-iy9. these aspecs ogeher wih he prediced increase of Polish foreign invesmenshould be he subjec maer of furher research. A he presen sage however, iseems crucial o precisely idenify he invesmen process iself, including he prole

of he enerprises which become invesors.Recen sudies concerning he inernaionalizaion of an enerprise seem o rep-resen a compromising aiude and resor o eclecics in making use of various avail-able heories depending on a widely undersood conex in which he process of heinernaionalizaion of a company akes place10. the foreign invesmen being hehighes form of he process is so specic and idiosyncraic depending on he inves-ors counry of origin, business environmen, siuaion in a paricular branch and heechnological facors ha i seems fuile o search for a universal heory which wouldembrace all he elemens, and which would be applicable in all cases 11.

7Promotion goes to economy, Rzeczpospolia 23.02.2010.8 to compare he Japanese Foreign trade Organizaion JEtRO has a yearly budge wihin he

range of 1.2 billion PLN, in Grea Briain he annual expendiure on promoion reaches 200 millionpounds. Rzeczpospolia 23.02.2010.

9 P. Debaerea, H. Leeb, J. Leec, It matters where you go: Outward foreign direct investment andmultinational employment growth at home, Journal of Developmen Economics, Vol. 91, Issue 2,March 2010, s. 301-309; S. Federico, G. A. Minerva, Outward FDI and Local Employment Growth inItaly, Economic working papers 613, Bank of Ialy, Economic Research Deparmen, 2007.

10 M. Gorynia, B. Jankowska, Teorie internacjonalizacji [Theories of internationalization], Gos-podarka Narodowa 10/2007, p. 41.

11 Ouward FDI is so srongly eleological, rm-, counry-, secor-, and environmen specicha one can hardly expec o develop an all embracing general explanaion applicable in all cases.


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I is assumed ha he rs sage of inernaionalizing a company is paricipa-ion in foreign rade. the macroeconomic conceps described by M. Gorynia andR. Owczarzak explain he ow of expors and impors beween counries. they in-

clude, among ohers, he concep of absolue advanage by A. Smih12

, he concep ofcomparaive advanage by D. Ricardo13, or for ha maer he heorem by Heckscher-Ohlin-Samulson14. the link beween he pure heory of foreign rade and he heoryof inernaional producion is provided by he (mezoeconomic) concep of a prod-ucs life cycle by Vernon15. the conceps of inernaional enrepreneurship are alsoin-beween consrucs beween he above menioned heories, and he FDI heoriesof a microeconomic characer. the mos popular one, he Uppsala model analyzeshe sequences of he inernalizaion of a company and de facto is a combinaion ofearlier paradigms. I incorporaes boh, simple inernaionalizaion hrough rade aswell as he complex venures of direc invesmen16. As far as he in-beween con-

ceps are concerned he heoreical oupu is incredibly rich and i would be difculo enumerae even a par of he various conceps. However, i is worh menioningha hey include boh, very general paradigms, as for example he Invesmen Devel-opmen Pah (IDP) 17 which assumes ha counries (economies) undergo a ve-sageevoluion in which he consecuive sages are marked by he counrys inclinaion oexpors or impors of invesmen, and according o which a a cerain sage of devel-opmen he counry becomes he provider of he capial. On he oher hand, here arealso very deailed models which ake ino accoun he characerisics of he presenglobalized economies and which emphasize he new ools, e.g., he Inerne18.

Mos likely he modes volume of FDI from Poland viewed agains he1.background of inernaional ow of capial should be relaed o he smaller scale ofransnaional corporaions (tNC) originaed in Poland, which are reaed as vehicles

M. Svelii, Theoretical context of outward foreign direct investment from transition economies, in:M. Svelii, M. Rojec, Facilitating transition by internationalization, Outward direct investment fromCentral European Economies in Transition, Ashgae 2003, p.15.

12 A. Smih,An inquiry into the nature and causes of the wealth of nations, Warsaw, 1954.13 D. Ricardo,Principles of political economy and taxation, Amhers, New York, 1996.14 B. Ohlin,Interregional and international trade, Cambridge MA, 1933.15 R. Vernon,International Investment and International Trade in the Product Cycle, Quarerly

Journal of Economics Cambridge 1966.16 J. Johanson, F. Wiedersheim-Paul, the inernaionalizaion of he rm Four Swedish cases,

hp://www.iei.liu.se/program/ekprog/civilek_inern/ar_3/723g17/pwom_2008_filarkiv/1.104707/FourSwedishCases.pdf, dae of access: 12.03.2011 and analysis by N. Kossu, F. Kaczmarek, Inter-nationalisation process of the rm Scanias case in Poland, Master Thesis - International MastersProgramme in Business Administration - Strategy & Culture, 2003/01, Avdelning, Insiuion Division,Deparmen Ekonomiska Insiuionen, Linkping, 20.01.2003.

17 J. Dunning, R. Narula, op.ci., p. 1-9.18 S. Mahew, Internationalization, The Internet inuence on international market growth in the

rms outward internationalization process, Queensland Universiy of technology, 2009, p. 193. thesudy showed a posiive impac of he Inerne and is ools including, Inerne fora, discussion groups,

e-business on he level of rms inernaionalizaion, is inernaional mindse, business relaions, man-agemen and access o informaion.


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for he disribuion of capial. For his reason in order o sudy Polish FDI i seemsjusied o make reference no only o he classical FDI heories bu also o he heo-ries of inernaional enrepreneurship. these wo rends seem he mos relevan o

analyze Polish direc invesmen and Polish enrepreneurship in he EU.Ye, i should be poined ou ha he inernaional publicaions concerning iner-naional enrepreneurship are in fac dominaed by he perspecive of well developedcounries. As a resul he objec of analysis involves sraegies and invesmen made

by companies which come from counries wih advanced echnologies and whichare addressed a less developed markes. A he oher exreme, here is a handful ofheories19 (in comparison o he above menioned ones) which refer o he so-calledehnic economy, which in fac analyze opposie siuaions, ha is iniiaives aken

by companies originaing from less developed counries and direced a more af-uen economies20. Judged agains he above menioned heoreical background he

funcioning of Polish companies in he EU marke (especially in he 15 old EUcounries) looks raher aypical. the invesmen of Polish eniies in he EU does no in wihin he classical models of capial ow from a well developed counry oa poorly developed one, bu on he oher hand, hey are cerainly no exoic enough21o be analyzed in he conex of an ehnic economy22.

Inernaional Enrepreneurship (IE) dened as a process of creaive discoveryand exploiaion of opporuniies which are locaed ouside he domesic marke ofa company where i operaes in pursui of gaining a compeiive advanage doesno exis as a separae and independen area of sudy23. In consequence he IE issuesare o a limied degree aken up by researchers ineresed in he inernaionaliza-ion of enerprises and inernaional managemen. B.M. Ovia and P.P. McDougallregarded as pioneers of IE dene his concep as a combinaion of proacive, innova-ive behaviour which acceps risk-aking, which ranscends counries borders andwhich is direced a creaing value in organizaions24. In oher words, inernaional

19 Alhough in 2006 a repor by UNCtAD was published under he ile, Direc foreign invesmen

from developing economies undergoing ransformaion: implicaions for developmen, i in fac concerned

invesmen made by he BRIC counries (Brasil, Russia, India and China) in he raw maerial, energy secor.20 I. Ekeledo,Internationalization of rms from emerging economies: entry mode strategies and

research propositions, Inernaional Journal of Business Sraegy January 2008.21 More abou he similariies and numerous differences beween FDI made by Corporaion from

he CEE counries and hose from he hird world counries such as he empo of globalizaion chang-es, he number of small and medium companies, he role of ICt, low imporance of ehnic ies, ora more defensive characer, cf. M. Svelii, Slovenia Transition Economies Multinationals - Are TheyDifferent From Third World Multinationals? in: Chakrabory, Chandana (ed.), Proceedings of he 8hInernaional conference on Global Business and Economic Developmen, January 7-10, 2004, Guada-lajara, Mexico 2004.

22 You canno be serious alking abou ouows of capial when ransiion economies so badlyneed an inow of FDI a commen made in 1996 quoed in: M. Svelii, M. Rojec, op.ci, p. xxviii.

23 t. Kranicka (ed.),Przedsibiorczo midzynarodowa Aspekty teoretyczne i praktyczne [Inter-national entrepreneurship. Theoretical and practical aspects], Kaowice 2008.

24 P.P. McDougall, B.M. Ovia, Some fundamental issues in international entrepreneurship,Enrepreneurship theory and Pracice July 2003, p. 5.


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enrepreneurship is a process of discovery, enacmen, evaluaion and exploiaion ofopporuniies beyond naional borders in order o creae new goods and services 25.

According o S.A. Zahr and G. George, IE is a process of creaive discovery

and exploiaion of opporuniies perceived ouside he inernal (domesic) markeof a given company which srives o achieve a compeiive advanage26. As i wasobserved by t. Kranicka IE is a separae bu sill no solidied research domain inhe process of crysallizaion. Consequenly, i has no ye won full accepance fromresearchers dealing wih boh enrepreneurship and inernaionalizaion a he cross-roads of which i is emerging27.

t. Huzschenreuer, t. Pedersen and H. Volberda propose a co-evoluionarymodel of inernaionalizaion in which he process of inernaionalizaion is a resulof he conjugaed ineracion beween managerial inenions, learning in he sense ofgaining experience and oher insiuional facors and forces of selecion28. the mod-

el suggess ha processes of inernaionalizaion should ake ino accoun conscious,clearly dened aims, ambiions of he managerial saff, individually made decisionsas facors deermining he manner and he naure of making an invesmen. thus,inernaionalizaion should no be reaed only (mainly) in he sense of a reacion ohe changes aking place wihin he so-called pah dependence.

Graph 1

Model of internationalization according to T. Hutzschenreuter, T. Pedersen and H. Volberda

Source: afer t. Huzschenreuer, t. Pedersen and H. Volberda, the role of path dependency and managerial intention-

ality: a perspective on international business research, Journal of Inernaional Business Sudies, 2007, 38, p. 1057.

25 t. Kranicka (ed.), op.ci.26 S.A. Zahra, G. George, International Entrepreneurship: The current status of the eld and future re-

search agenda in: Strategic Entrepreneurship Creating a new mindset, M.A. Hi (eds.), Oxford 2002, p. 259.27 t. Kranicka (ed.), op.ci, p. 19.28

t. Huzschenreuer, t. Pedersen, H. Volberda, The role of path dependency and managerial in-tentionality: a perspective on international business research, Journal of Inernaional Business Sud-ies 2007, 38, 1055-1068.

Managerialinenionaliy

Inernaional posiion

knowledge/experience

Insiuional forces

Selecion forces

Pah and process ofinernaionalizaion


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the so-called Uppsala model (of sages in inernaionalizaion) was a milesonein research ino he process of inernaionalizaion of an enerprise. I was pu for-ward by researchers from he Scandinavian School of Managemen, J. Johanson and

F. Wiedersheim-Paul29

. this approach assumes a sequence of seps which are akenmainly by small and medium size companies wih an aversion o risk-aking in heprocess of expansion ino foreign markes. the basic sages include: 1) lack of regu-lar expor aciviy, 2) exporing via he mediaion of agens, 3) seing up a branchsale deparmen, 4) saring own producion abroad. In he Uppsala model foreignexpansion is no ex ante he aim of he company bu an effec of gradual decisionsconcerning close neighbouring markes30. the model became an inspiraion for manydevelopmens and modicaions referring o he idea of he sequenial naure of heinernaionalizaion process. the criicism of he model refers o he fac ha i isoo general and deerminisic as i does no specify he borderlines beween varioussages of he process, assumes unidirecionaliy, and as a maer of fac i canno beapplied o services and does no accoun for he possibiliy of skipping some sages,he so-called leapfrogging31. this kind of criicism became a springboard for buildinga model of unconvenional inernaionalizaion32. this approach formulaes a moregeneral view ha inernaional companies, especially large corporaions, frequenlyskip some sages from he Uppsala model, and hey addiionally show a endency oener disan markes in he early sages of expansion. Anoher proposal of simula-neous inernalizaion, which according o M. Gorynia is a variey of unconvenionalinernaionalizaion, assumes ha he convergence of economies and he Californi-

zaion of needs favour simulaneous expansion ino many markes and leapfroggingsome sages in he sequenial model33. A qualiaively new approach o he inerna-ionalizaion process is offered by he nework approach in which a company is per-ceived as an elemen of a sysem of many acors muually inuencing one anoher,as a par of a nework, which in urn is reaed someimes as a hird possible formof coordinaion of an economy apar from hierarchy and marke34. the nework ap-

proach incorporaes various rends such as resource dependence heory35, or he new

29 J. Johanson, F. Wiedersheim-Paul, (1975), op.ci., p. 305-322.30 the signicance of he foreign expansion pah of an enerprise is he knowledge and gained

experience.31 M. Gorynia, B. Jankowska, op.ci., p. 29-30.32 L.S. Welch, R. Lousarinen, Internationalization, Evolution of a concept, Journal of General

Managemen 14 (2), 1988, in: M. Gorynia, B. Jankowska, op.ci., p. 32.33 S. Bridgewaer, The internationalization process and type of rms, in:International Business.

Theories, policies and practices, M. tayeb (ed.), Pearson Educaion Harlow 2000 in: M. Gorynia,B. Jankowska, op.ci., p. 33.

34 D. Knoke, J.H. Kukliski, Network analysis, basic concepts in markets, hierarchies and net-works. The coordination of social life. G. thompson, J. Frances, R. Levacic, J. Michell, SAGE Publica-ions, London, in: M. Gorynia, B. Jankowska, op.ci., p. 33.

35 J. Pfeffer, G. Salancik, The external control of organizations, Harper and Row, New York,1978.


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insiuional economy wih he ransacion cos heory36 and i assumes ha eneringa new marke requires esablishing a nework of relaions in he marke.

On he oher hand in he REM model, inernaionalizaion is dependen on he

following hree facors: R reason facor which denes he reason why a companymakes a decision abou inernaionalizaion, E environmen facor, deerminingwhere he company wans o implemen inernaionalizaion, and he M - mode fac-or describing he manner of he inernaionalizaion of a company. these hree fac-ors inuence one anoher and complemen one anoher and are herefore reaed noas independen variables bu as dependen variables37.

Foreign invesmen can be also viewed from he perspecive of he so-called eh-nic economy ha is he par of an economy which is conneced wih he presence ofimmigrans. Research carried ou by he German Insiue of Urban Affairs in 2005suggesed ha o fully describe his secor of economy a combinaion of hree con-ceps should be used: he niche model (das Nischenmodell), he culural model (das

Kulturmodell) and he reacion model (das Reaktionsmodell)38. the niche model re-fers o he rs generaion of immigrans and denes aciviies aken by hem mainlyin order o fulll heir own specic needs, and i does no compee wih he res of heGerman economy (Ergnzungskonomie). the culural model perceives he emer-gence of an ehnic economy as a resul of such facors as radiion, roos, communiyfrom which he immigrans come from and heir economic order. the reacion modelreas ehnic economy as a reacion o he exising circumsances; he only way o ge

pas he hurdles. this paricular model seems o be he mos appropriae o describe

he aciviies of Polish enrepreneurs in Germany. However, i seems ha he appli-caion of he ehnic economy concep as he framework for analyzing Polish FDI inhe EU counries is no jusied because of he scale and naure of Polish immigra-ion. the fundamenal disinguishing characerisics of an ehnic economy includingsrong family ies, rus and muual suppor for he comparios, frequen unwilling-ness of he local communiy, operaing in a secor where here is need for inensivelabour oulay and low capial expendiure, where he major organizaional form isa small company or a micro-company, and especially he assumpion ha he socialneworks wihin he group and ehnic resources are indispensable for he funcioningof he ehnic economy39, as well as he accepance of he sequence of employmen

36 O.E. Williamson,Markets and Hierarchies, analysis and antitrust implications: A study in theeconomics of international organization, New York 1975.

37 N. Daszkiewicz,Internacjonalizacja maych i rednich przedsibiorstw we wspczesnej gospo-darce [Internationalization of small and medium companies in contemporary economy], Gdask 2005.

38 H. Floeing, B. Reimann, U.K. Schuleri-Harje,Expertise Ethnische konomie: Integrationsfak-tor und Integrationsmastab, Berlin 2004, hp://middleeasmessenger.chrisina-schlegl.de/wp-conen/uploads/ehnischeokonomie.pdf, dae of access: 20.11.2010.

39 Cf. Idea of homophily - birds of a feather ock together here is a very clear endency amongimmigrans operaing in Germany o form business groups, join enrepreneurship despie he fac ha

such srong homogeneiy of a group in erms of naionaliy does no correlae wih good resuls of hecompany (homophily paradox). N. Ferala,Determinants of successful immigrant entrepreneurship in


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from hired labour o self-employmen40, all hese feaures do no seem o provide hebes ramicaion o discuss Polish enrepreneurship in he EU.

In he lieraure devoed o he opic he heory of inernaional producion is also

known as he OLI (ownership-localizaion-inernalizaion)41

paradigm because of hepresened se of condiions. I is used as he heoreical basis for analyzing he iner-naional expansion of tNC, or he FDI ow. J.H. Dunning disinguished hree ypesof condiions which have o be me a he same ime for FDI o occur: 1. the com-

pany mus have some ownership advanage which would give i an advanage overhe compeiors in anoher counry. 2. the ransfer of he advanage possessed by hecompany abroad wihin is own organizaion is more proable han is sale or leaseo a foreign company, ha is here are benes from inernalizing is aciviy (in hesense of reducing he cos by carrying ou ransacions wihin he company). 3. theremus be a localizaion advanage which makes he company place heir producionin a paricular counry. thus, according o he eclecic model by Dunning, ForeignDirec Invesmen is a funcion of hree variables which decide abou he invesmen:characerisic feaures of a given company, benes from inernalizing is economicaciviy and localizaion benes. A cerain modicaion of his model was proposed

by M. Peng who suggesed ha Dunnings OLI paradigm should be exended by heso-called opion for learning advanage ha is benes coming from learning42. theerm opion for organizaional learning and innovaion should be undersood asan opporuniy (which is creaed by invesing abroad) o acquire knowledge in hecounry of locaion and carry ou innovaive aciviy. M. Peng argues ha apar from

he readiness o overcome imperfecions of he marke and making use of he pos-sessed advanage FDI should be reaed as an opporuniy for learning, innovaionand growh. Anoher improvemen of he OLI model is also suggesed by S. Guis-inger43. the OLMA paradigm replaces inernaionalizaion wih he mode of eneringa marke (M - Mode of enry) and aking ino accoun he adjusmen of a company ohe inernaional environmen (A Adjusmen) which allows for a holisic percep-ion of he inernaionalizaion of companies.

the Federal Republic of Germany, Disseraion: Universi tbingen, 04 WirschafswissenschaflicheFakul, 2005, p 204-205.

40 O. Wahlbeck, Work in kebab economy: A study of the ethnic economy of Turkish immigrants inFinland, Ehniciies 2007, 7, 543, p. 558.

41 J. H. Dunning, The Determinants of International Production, Oxford Economics Papers No3, 1973.

42 M. Peng, Foreign direct investment in the innovation-driven stage: Toward a learning optionperspective in: M. Green, R. McNaughon, The location of foreign direct investment. Geographic andbusiness approach, Avebury Ashgae Publishing 1995, p. 29-42.

43 S. Guisinger,From OLI to OLMA incorporating higher levels of environmental and structural

complexity into the eclectic paradigm, Inernaional Journal of he Economics of Business vol. 8, no2, 2001.


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the ransacion cos heory44 provides concepual ramicaion for he choice ofhe form of foreign expansion made by a company. the choice is subordinae o heminimizaion of he producion and ransacion cos. the laer include he cos of

obaining all kinds of informaion necessary for he funcioning in he marke envi-ronmen, he cos of conducing negoiaions wih parners and he cos of complyingwih conracs. the exisence of a posiive ransacion cos resuls from marke inef-ciency as a way of regulaing a ransacion. the available lieraure on he modesof enering a foreign marke is incredibly rich45. the following mehods are disin-guished: hegreeneldype of invesmen, ha is from scrach, is aken by compa-nies which wan o nance a compleely new economic eniy in he counry of desi-naion by building all he necessary faciliies; acquisiions which involve purchasingan exising company in he counry of desinaion by a foreign invesor which is done

by acquiring he conrolling block of shares from he former owner; mergers whichoccur when wo or more companies merge ogeher, and join-venures which ake

place when he resources of wo companies are joined and a new eniy is hereforecreaed wih boh companies sharing he ownership of he new eniy and he pros

brough by he company. Also he browneldinvesmen can be disinguished whichis a specic kind of acquisiion, when he invesor iniially purchases an already ex-ising company and ransforms i ino an almos compleely new eniy.

INVEStMENt FROM tHE COUNtRIES OF SYStEMIC tRANSFORMAtIONIN CENtRAL AND EAStERN EUROPE

the heoreical discourse concerning he Ouward Foreign Direc Invesmen(OFDI) from he counries of Cenral and Easern Europe (CEE) indicaes ceraindeparures from he main rend (ha is from classical FDI heories for highly devel-oped counries) bu hese deviaions are no signican enough o quesion he use ofhese heories o analyze he realiies of ransformaional economies46. Any occurringdivergences should be rs of all ascribed o he delay wih which companies fromhese counries ener he process of globalizaion, he empo of globalizaion andoher aspecs of he realiy in which hey funcion47. the research ino FDI from he

counries of sysemic ransformaion shows ha he primary simulus for he compa-nies from ha region o go for inernaionalizaion consised of exernal pull facorsraher han he possessed advanage or resources acing as facors pushing hem ou

44 M. Gorynia (ed.), Strategie rm polskich wobec ekspansji inwestorw zagranicznych [Strategiesof Polish companies towards expansion of foreign investors], Pozna 2005, p. 28

45 M. Gorynia (ed.), op.ci., p. 50.46 M. Svelii, Theoretical context of outward foreign direct investment from transition econo-

mies, in: M. Svelii, M. Rojec, Facilitating transition by internationalization, Outward direct invest-ment from Central European economies in transition, Ashgae 2003, p.15 and M. Svelii, Slovenia

Transition, op.ci.47 M. Svelii, Theoretical context, op.ci., p.15.


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of he counry (push facors)48. the siuaion will be changing parallel o he devel-opmen of hese economies. I is already so in he case of invesmen made in moremaure, more afuen markes. Companies should possess cerain resources which

make hem compeiive and aracive enough o inves in a more developed marke.the resources model49 or he evoluionary model50 seems o be highly applicablehere. the concep of searching for resources abroad is conradicory o boh51. On heoher hand he unconvenional heory of imbalance which assumes ha enerprisesdo no have cerain asses bu hey wan o acquire hem in he process of foreign in-vesmen (and regain balance) is a combinaion of boh above approaches52. Wha issignican, as he name iself suggess he unconvenional heory of FDI imbalance,conrary o he pure resources searching heory, pus an emphasis on some kind ofimbalance beween he asses which he company possesses and hose i is shor of.Consequenly, i akes ino accoun boh he srong and he weak poins of he com-

pany looking a i holisically, hrough a se of elemens which consanly affec oneanoher. I analyzes relaions beween he elemens wihou limiing he percepionof he company only o he prism of is advanages or is weaknesses bu i reas FDIas an aemp o regain balance by acquiring he missing resources.

the speciciy of FDI from he CEE counries is brough o aenion in analysesby E. Rugraff53. the invesmen originaing in he Czech Republic and Hungary ismos ofen made by foreign invesors already operaing in hose counries (he so-called indirec invesmen made by eniies wih he paricipaion of foreign capial).In he case of Slovenia heir naional eniies which aspire o he rank of ransnaional

corporaions decide o ener foreign markes. the invesmen from Poland is, on heoher hand a resul of aciviies underaken by large enerprises, as a rule wih saecapial which represen sraegic secors such as he exracion or infrasrucure sec-or. the speciciy of FDI from he CEE counries sems from he fac ha here isa small number of tNCs invesing in he neighbouring counries which is responsi-

ble for he majoriy of he ouward capial in he form of FDI.

48 M. Svelii, Conclusions, Policy Suggestions and Future Perspective, in: M. Svelii,

M. Rojec, op.ci, p. 244.49 E.t. Penrose, The theory of the growth of the rm, Oxford 1959.50 B. Kogu, U. Zander,Knowledge of the rms and the evolutionary theory of multinational cor-

porations, Journal of Inernaional Business Sudies 4h Quarer, 1993, p. 625-646; C.K. Prahald,G. Hamer, The core competence of the corporation, HBR, May-June,1990; J.A. Canwell, Technologicalinnovation and multinational corporations, Oxford 1989, J.A. Canwell, Transnational corporationsand innovatory activities UN Library on Transnational Corporations, London, New York, 1994.

51 A. Fosfuri, M. Moa,Multinationals without advantages, Scandinavian Journal of Economicsvol. 101 (4), 1999, p. 617-630.

52 H.C. Moon, t.W. Roehl, Unconventional foreign direct investment and the imbalance theory,Inernaional Business Review Vol. 10, 2001, p.151-161.

53 E. Rugraff, Strengths and weaknesses of the outward FDI paths of the Central European coun -tries, Pos-Communis Economies Vol. 22, Issue 1 March 2010, p. 1-17.


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320 Mara Gz

As far as he ouward FDI is concerned, K. Kaloay includes Poland in he

group of Seven Dwarfs ogeher wih Esonia, Croaia, Hungary, Czech Repub-

lic, Slovakia and Slovenia, and heir FDI is confroned wih invesmen from he

Russian Federaion54

. this group of counries is, among ohers, characerized byhe limied role of he sae as a caalys of changes creaing favourable condiions

for FDI made by regional companies. Such invesmen is generally concenraed

only in he region, in he neighbouring counries and mosly moivaed by he small

size of he domesic marke, which in fac makes he scale advanage impossible o

achieve. Addiionally, such FDI has a horizonal characer, ha is i is moivaed by

he aim of gaining access o foreign markes.

Generally, he speciciy of FDI from he CEE counries resuls from he rela-

ively signican role played by foreign invesors and from subsanial involve-

men of he service secor (banking, commerce). this differeniaes he FDI ow

from hose carried ou by companies from highly developed counries, as a rule

locaed in he indusrial secor o sar wih55. the FDI from he CEE counries is

also srongly inuenced by all he globalizaion processes including accession o

he EU56.

On he oher hand, he analyses by M. Gorynia, J. Nowak and R. Wolniak poin

ou he idiosyncrasy of he invesmen developmen pah (IDP) for paricular coun-

ries and he impac of he exernal effecs for he shaping of he ne ouward inves-

men (NOI) posiion for he CEE counries57. As i seems he nancial-economic

crisis of 2008-200958 speeded up he momen of ransiion o he consecuive sages

of NOI for hese counries. In his conex i is worh menioning ha he opposieeffec on he invesmen posiion of some counries was made by a seemingly posi-

ive impulse, namely accession o he EU (Porugal and Ausria)59. this siuaion in

connecion wih he increased inow of new invesmen had a disurbing effec on

he relaions beween inward and ouward FDI, and by he same oken i delayed

he ransiion of hese economies o he successive sages of IDP. In oher words,

despie he fac ha counries generally follow he pah of IDP (especially small

and medium-size ones, because in he case of large counries like, for example he

54 K. Kaloay, the fuure of Russian ouward foreign direc invesmen and he eclecic para-digm: Wha changes afer he crisis of 20082009? hp://papers.ssrn.com/sol3/papers.cfm?absrac_id=1702829, p. 14.

55 K. Kaloay, Outward FDI from Central and Eastern European Countries, Economics of Plan-ning Vol. 37, No 2, p. 141-172, DOI: 10.1007/s10644-004-7506-z , p. 148, 151.

56 M. Svelii, op.ci., 2004.57 M. Gorynia, J. Nowak, R. Wolniak,Foreign direct investment of Central and Eastern European

countries, and the investment development path revisited, Easern Journal of European Sudies Vol. 1,Issue 2, December 2010, p. 34.

58 More abou he possible impac of he crisis on FDI bu mainly ouowing from Russia see

K. Kaloay, The future59 M. Gorynia, J. Nowak, R. Wolniak, op.ci., p.27.


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Russian Federaion he ouward FDI can be explained by oher facors, e.g., he oli-

garchic sysem, wealh concenraion, or he willingness o shif capial) is precisecourse remains differen for individual counries60.

the low level of ouward FDI from he CEE counries is caused by he disadvan-aged saus of lae invesors and he sysemic ransformaion cos. Also, he shap-ing of he ne posiion on he Invesmen Developmen Pah (IDP) in hese counrieswas affeced by he EU enlargemen in 2004, which gave a simulus no only for heexpansion of domesic companies bu also for addiional inward FDI61.

Someimes in he lieraure devoed o FDI a erm middle income counriesis used62. I describes economies locaed (in a guraive sense and someimes ina geographically lieral sense like in he case of Poland) beween he highly devel-oped, afuen and echnologically advanced counries, and poorly developed coun-ries wih a cheap workforce. the necessiy o rea companies from such counriesin a differen way sems from he fac ha hey do no possess a specic advanage,a well known brand or unique echnology, and from relying on low producion coss.Companies from such counries canno compee, e.g. in erms of echnology wihrms from highly developed counries and in erms of coss wih companies from

poorly developed counries. therefore designing furher research ino Polish FDIaimed a exploring and classifying hem should ake ino accoun many from heabove paradigms. In erms of heory, such research is in a way an aemp o answera quesion o wha exen hese heories are useful when analyzing a relaively aypi-cal phenomenon (invesmen from a less developed o a more developed counry) bu

no enirely exoic (because of he various similariies beween he EU counries andPoland), a kind of aypical classic example.

POLISH FOREIGN INVEStMENt

there is no a lo of research concerning Polish foreign invesmen63. I includes:

annual repors of he Naional Bank of Poland (NBP), he UNCtAD World Invesmen

Repors, informaion from he trade and Invesmen Promoion Deparmen, as well

as from he Economic Deparmens which funcion nex o Polish diplomaic services

abroad, and addiionally from: press aricles and he repor of he Analyses and Fore-casing Deparmen of he Polish Minisry of Economy, e.g., Polish direc invesmen

2006/2007 published in March 2008, or he sill rare scienic analyses64.

60 K. Kaloay, Outward FDI, p. 152-153.61 Ibidem, p.140.62 A. Klimek, the Deerminans of Ouward Foreign Direc Invesmen: he Case of Poland Very

preliminary (draf), July 2009, hp://esg.org/EtSG2009/papers/klimek.pdf , p. 3.63 E. Radomska, Head of Economics Deparmen and a lecurer in he Insiue of Economics and

Managemen a Polish Open Universiy (POU), hp://www.pou.pl/ , dae of access: 10.11.2010.

64 D. Rosai, W. Wiliski, Outward Foreign Investments from Poland, in: M. Svelii, M. Rojec,op.ci., p. 175-204; 244.


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322 Mara Gz

Wha is he posiion of Polish foreign invesmen? the Analyses and ForecasingDeparmen in he Minisry of Economy of he Republic of Poland conduced a com-

paraive analysis on he basis of he UNCtAD daa for Poland, he Czech Republic

and Hungary for he period from 1997 o 2007. Wih reference o he NOI index percapia, ha is he ne value of ouward invesmen which consiues he differencebeween he ouward FDI and he inward FDI, hese counries (including Poland) canbe classied beween he hird and fourh sage of developmen. On he oher hand,according o M. Gorynia, J. Nowak and R. Wolniak and he research hey quoe 65,Poland is a he nal phase of he second sage and a he beginning of he hirdsage66. this classicaion is also conrmed by he daa from he NBP concerning heinernaional posiion of Polish invesmen in he years 1994-2009.

Graph 2

The investment position of Poland measured with NOI per capita

Source: prepared by he auhor on he basis of he NBP inernaional invesmen posiion of Poland, 1994-2009 annual daa (USD, EUR & PLN).

65 F. Boudier-Bensebaa, FDI-Assisted Development in the Light of the Investment DevelopmentPath Paradigm: Evidence from Central and Eastern European Countries, transnaional Corporaions2008, Vol. 17, No 1, p. 37-67, C. Koardi, F. Filippaios, M. Papanasassiou, The Investment Develop-ment Path and the Product Cycle An Integrated Approach: Empirical Evidence from the New EUMember States of CEE, Universiy of Reading Economics and Managemen Discussion Papers 2004

No 003, Reading: Universiy of Reading. afer M. Gorynia, J. Nowak, R. Wolniak, op.ci., p. 23-25.66 M. Gorynia, J. Nowak, R. Wolniak, op.ci., p. 26.


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UNCtAD, which is he major source of informaion abou he condiion andow of direc foreign invesmen in he world, has for years published indices con-cerning real and poenial FDI. they include he so-calledFDI Performance Index

of real FDI and he FDI Poenial Index concerning poenial FDI67

. the index ofreal foreign direc invesmen is calculaed as a relaion beween he paricipaion ofa counry in he inernaional FDI and is share in he world GDP. the index valuehigher han 1 shows ha he counry receives or sends ou more FDI han i is ex-

peced judging by is economic posiion. the FDI Poenial Index includes a widerange of facors which affec araciveness such as, he value of GDP, expendiureon Research and Developmen, he raio of sudens in he general populaion, ec.According o he available daa (lack of informaion abou he index value) wihrespec o he real inward FDI (2005-2007) Poland was ranked 60 in he analyzedgroup of 141 counries, and wih respec o he poenial FDI index i was ranked 43.Wih respec o ouward FDI i was ranked 38.

Anoher index of paricipaion in he inernaional ow of capial used byUNCtAD is he number of ransnaional corporaions from a paricular counry.According o UNCtAD 2000he lis of op 25 non-nancial tNCs based in CEEincluded only one company from Poland, KGHM Polska Mied ranked 22. the Ne-work Spread Index also remains quie low, and i correlaes o he number of coun-ries in which he company is presen wih he number of counries poenially openo inward FDI (for Poland i is 1.82)68. Oher calculaions, he so-called ouward FDI

performance index (OFDIPI) poin o he counrys poenial concerning ouward

FDI, and indirecly o he possibiliy of he ransiion o furher sages of NOI as i isassumed in J.H. Dunnings model69. the value smaller han one means a weaker par-icipaion in supplying capial (he correlaion beween he GDP of he counry andhe world GDP) in he form of FDI (he correlaion beween he counrys ouwardFDI and he world ouward FDI) han i would be expeced judging by he parici-

paion of he counry in he world economy. For Poland in he years 1990-2008 heindex assumed values wihin he range of 0.02-0.536. Beginning wih 2005 when ireached a maximum level, i has been dropping and i reached 0.222 in 2008 70.

According o UNCtAD gures Polish direc foreign invesmen worh 3,120

million Euro in 2007 consiued 0.35% of he world capial ow in foreign in-vesmen. this ranked Poland a 44. However, in erms of cumulaive value i

was ranked 43 (abou 19,500 million Euro). In he ranking of he EU counries

Poland holds 16h posiion as far as he cumulaive value of Polish capial invesed

67 World Investment Report: Transnational Corporations and the Infrastructure Challenge,UNCtAD, Geneva 2008.

68 K. Kaloay, Outward. , p.158-159.

69 M. Gorynia, J. Nowak, R. Wolniak, op.ci. p. 32.70 Ibidem, p. 30.


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324 Mara Gz

abroad is concerned71. In 2005 he value of Polish foreign invesmen consiued

as lile as 33% of inward FDI, in 2006 his correlaion was improved and reached

46.9%72.

For many years he Polish FDI was on he verge of a measuremen error. In 2004i reached a decen value of 624 million Euro73. According o expers, companieshad o reach he mauriy level for foreign invesmen. to sar wih small companiesmerged wih small companies and medium-size ones wih medium-size ones. thenlarge companies emerged on a naional scale and hey sared o hink abou becom-ing a large company on a regional scale. this kind of sraegy became very clear aferaccession o he EU.

According o some opinions he small paricipaion of Polish invesmen in ou-ward invesmen from he region of Cenral and Easern Europe is in paricular clear-ly visible when we correlae i wih oher indices such as he paricipaion of Polish

GDP in he GDP of he region, or he share of inward foreign invesmen coming oPoland agains he backdrop of inward invesmen coming o he enire region74. thisis mos likely deermined by he size of he counry. Namely, he subsanial size ofhe inernal marke did no provide a simulus for expanding business aciviy ou-side is area. Oher barriers are mos likely conneced also wih he low level of na-ional reserves (hunger for capial) and high araciveness for he inow of foreigncapial, which mean ha Poland was a receiver of FDI raher han a supplier. Sucha siuaion seems o reec he predicions of he model of developmenal sages byOzawa75 and can be explained by he heory of condiionings76.

In 2009 he world value of FDI dropped by 40% in comparison wih 2008 andi amouned o ca. 1 billion dollars. the drop was mainly caused by a drasic de-crease of mergers and acquisiions (M&A) by 2/3 and a drop in greeneld projecs

71 L. Pays (ed.),Polskie inwestycje zagranic [Polish foreign investment], Insyu Bada Rynku,Konsumpcji i Konkurencji, Sudia i Maeriay 87, Warszawa 2009, p. 10.

72 J. Wyszkowska-Kuna,Foreign Direct Investment in the Service Sector - Flowing from Polandand into Poland - in Light of Polands Accession to the European Union , Comparaive Economic Re-search Vol. 11, No 4/2008, Universiy of d, p. 41.

73Polskie rmy zaczynaj ekspansj zagraniczn [Polish companies start expansion abroad],Gazea 11.10.2006.

74 D. Rosai, W. Wiliski, op.ci., p. 200.75 the paradigm assumes ha he growh of an economy in he process of evoluion is based on

differen facors in consecuive sages, saring wih raw maerials and radiional producion facors,hrough a sage direced by invesmen, he sage of innovaion unil he sage when he developmendepends on he level of afuence. t. Ozawa, Foreign Direct Investment and Economic Development,transnaional Corporaions 1992, Vol. 1, p. 27-54.

76 the model assumes ha he inernaionalizaion of a company depends on domesic deermi-nans including economic policy and he srucure of indusry. I can be assumed ha lack of publicincenives and absorben inernal marke did no simulae invesmen made by Polish companies inforeign markes. P.R. Lawrence, J.W. Losh, Organization and Environment, Harvard Graduae Schoolof Business, Cambridge Massachuses, 1967; P.W. turnbull, A challenge to the stages theory of the

internationalization process, in: P.J. Rosson, S.D. Reed (eds.) Managing export entry and expansion,New York 1987, p. 21-40.


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by 23%77. the world economic crisis discouraged Polish companies from invesingabroad78. A he same ime, however, expers are emphaic ha his is he bes mo-men o sar a business in foreign markes79. According o a repor by Gran thorn-

on Inernaional (GtI) ou of 36 counries which were invesigaed he ambiion oacquire anoher company is in Poland incomparable o any oher counry 80. I seemsha he crisis is encouraging Polish companies ino aggressive expansion. As manyas 2/3 of he researched companies are planning o ake over anoher company inhe nex hree years. Alhough in he majoriy of cases his involves companies inPoland, 48% of he respondens also ake ino accoun foreign markes. the primaryaim is o nd new markes (60% of declaraions), gain access o new echnologiesand aracive brands (53% of responses), or o expand he scale of he conducedaciviy (19%). According o he repor by KPMG and PAIIZ from April 2010 heforeign expansion of Polish rms is growing81. Since 1994 Polish companies haveinvesed 76 billion PLN in foreign markes. Almos 40% of he income of Polish

producers comes from abroad. Over 90% of he larges Polish companies are presenin foreign markes. In he las ve years he value of he FDI of Polish companieshas risen more han six imes. the breakhrough momen was in 2004 when Poland

joined he European Union. Before ha dae he average annual value of Polish FDIwas ca. 86.7 million Euro, afer 2004 i was over 3 billion Euro. Research done byKPMG and PAIIZ shows ha as many as 88% of all he companies presen in foreignmarkes expor heir producs, 55% cooperae wih foreign parners, and 23% haveheir branches abroad. Expor is usually he rs sage of expansion. Only 18% of

company owners decide o inves in heir own producion branches. According ohe sudies by KPMG and PAIIZ he preferred region for expansion is Wesern Eu-rope (88%), hen Cenral Europe and he Balkans (71%) and Easern Europe (61%).the highes percenage of business eniies operae in he German marke (75%)followed by he Czech and Ukrainian marke. As expers from KPMG and PAIIZunderline, reforms in he Polish economy sared 20 years ago, bu he expansionof Polish companies abroad sared only 5-6 years ago. According o he NBP daacumulaive Polish foreign invesmen in he years 1994-2009 reached as much as26.1 billion dollars ha is abou 77 billion PLN. According o he recen NBP reporPolish foreign invesmen in 2009 reached he level of ca. 3.8 billion Euro (wih hevalue of inward FDI equal o 7.5 billion Euro)82.

77Auslandsinvestitionen erholen sich wieder, Wirschafswoche 20.01.2010.78 Cf. Sabnie ekspansja polskich rm [Expansion of Polish rms on the decrease], Rzeczpos-

polia 15.02.2010.79Zagranica kusi wyprzedaami [Tempting with sales abroad], Puls Biznesu 14.01.2010.80Duy apetyt rm znad Wisy [Big appetite of Polish companies], PAP, 2010-02-26.81 From press coverage: Rzeczpospolia, Dziennik Forsal, Gazea Wyborcza 01.04.2010.

KPMG Consuling Agency and Polish Agency for Informaion and Foreign Invesmen randomly choseand analyzed 112 ou of a housand companies wih he majoriy of Polish capial.

82 Naional Bank of Poland, Deparmen of Saisics, Polish foreign direct investment in 2009,Saisical Supplemen, Warsaw, Sepember 2010.


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326 Mara Gz

When analyzing Polish FDI i seems purposeful o quoe he resuls of he re-search carried ou in 2006 by he Insiue for Marke, Consumpion and BusinessCycles Research (in Polish abbreviaed as IBRKiK) from Warsaw commissioned

by a commercial insurance company, Korporacja Ubezpiecze Kredyw Ekspor-owych and carried ou on a group of invesors and poenial invesors83. I is also inorder o refer o he possibly rs in Poland comprehensive analysis of ouward FDIougoing from Poland which was carried ou by a research eam from he NicolausCopernicus Universiy in toru in 200784. In he rs case, he sudy included 40rms (10 invesors and 30 poenial invesors) wih he majoriy of Polish capialfrom he op of he ranking lis (e.g., he 500 larges companies in Poland) 85. themajoriy of rms were large companies, ha is employing over 249 people. thesudy conrmed a posiive correlaion known from earlier analyses beween suchelemens as: he size of he company, is nancial siuaion, or exporing experiences

and paricipaing in FDI. the facors deciding abou making FDI included: prospec-ive marke, earlier expors o a given counry, or low cos. to a lesser exen hedecisive facors included personal conacs, or he possibiliy of cooperaion wihforeign eniies. Such an imporan role aached o he facors referring o he pas(exporing experience) and o he fuure (marke prospecs) implies ha Polish en-repreneurs make an impression of being as if suspended beween wha was andwha will be. the real facors in he real ime of here and now (hic et nunc) seemo maer less. the decision o make FDI is also inuenced by he assessmen ofinvesmen barriers. In he analysis carried ou by IBRKiK over 50% of respondens

poined o insufcien nancial resources and lack of knowledge abou condiionsin he given marke. Subsanial compeiion was lised by 1/3, while 1/4 of he re-spondens menioned he lack of an insurance sysem offered by Polish insurancecompanies, and 1/5 poined o bureaucracy and an unsable poliical siuaion. In hefuure he company owners are mosly afraid of a change in he legal regulaions,and hey fear unfair compeiion from oher companies he leas. A clear endencyo sar wih invesing in markes locaed in close viciniy, and a laer expansionino furher markes conrms earlier observaions made by foreign sudies86. Fuureinvesors expec o increase he scale of heir aciviy as a resul of making FDI,whereas hey aach no much imporance o he possibiliy of improving heir work

efciency and increasing innovaion. the majoriy of he poenial invesors in hesudy expeced help form Polish sae insiuions87. I was o be demonsraed rs

83 W. Karpiska-Mizieliska, t. Smuga, op.ci., p. 31.84 W. Karaszewski, (ed.),Bezporednie inwestycje zagraniczne polskich przedsibiorcw [Foreign

direct investment by Polish entrepreneurs], toru 2008.85 Research showed ha companies wih domesic capial lower han 100%, mainly companies

wih paricipaion of foreign capial which were creaed as a resul of earlier FDI (indirec invesor) showa higher endency o undergo inernaionalizaion. M. Svelii, Conclusions op.ci., p. 201.

86 W. Karpiska-Mizieliska, t. Smuga, op.ci., p. 41.

87 Already a few years ago aenion was drawn o he need for quick and concree acions akenwihin he economic policy. Due o he empo of globalizaion processes and he exen of economic


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of all by creaing a favourable climae for invesmen by mainaining good poliicalrelaions, by public help, ha is direc nancial suppor, as well as by supplyinginformaion abou he invesmen condiions in a given counry. the mos frequen

form of invesmen was esablishing a branch (40%), building a branch (30%), lessfrequenly i involved a decision abou buying shares (20%) or join venures wiha foreign parner (10%)88. As i was poined ou by he IBRKiK expers a signicandispersion of he respondens opinions suggess ha decisions abou invesmenwere of a very individual naure. the invesors considered insufcien suppor fromhe Polish economic policy (50%) and insufcien own nancial resources (40%) ashe mos imporan barriers encounered during he invesmen process. However,none of he respondens included a lack of incenives (faciliaion) on he par of hereceiving counry, or large compeiion as a barrier for such invesmen. I appearsha he expecaions of invesors and poenial invesors are direced a sae auhori-

ies and insiuions, whereas here are no demands or even expecaions owardshe receiving counry; a decisive imporance was aached o barriers coming fromPolish economic policy and hen from he companys capaciy (lack of capial andhe know-how), while less imporance was aached o he condiions presen in hemarke of he receiving counry. According o he Insiue for Inernal Marke andConsumpion, he process of he inernaionalizaion of Polish enerprises is a hevery iniial sage of developmen89.

the analyses carried ou by he Nicolaus Copernicus Universiy involved 102companies which made invesmen abroad. the larges group of companies under

sudy (64%) included enerprises which made he greeneld ype of invesmen.Only 17% poined o acquisiion as a way of enering a foreign marke. Anoherdominan group of eniies (63%) included companies which operaed by a subor-dinae branch or company, and only 22% paricipaed in join venures90. the majordirecion of foreign expansion in he form of FDI includes he EU counries (60% ofhe invesmen). Ou of his 60% is involved in he 15 old EU counries and 40% inhe 12 new EU member saes91. the main reasons behind FDI included marke andcos facors, he scale bene. the responses of he companies show some inconsis-ency. On he one hand, for one hird of he respondens making an invesmen deci-sion was aimed a reducing he risk in he domesic marke by diversicaion, on he

oher hand however, one hird of he respondens admied ha hey did no esimaehe risk of he projec because of he lack of need and compeences.

ransformaion, and afer years of neglec, enrepreneurs from ransformaional counries do no haveime for gradual resoraion of poenial and developmen of compeiion advanage herefore supporfrom he sae is very much in order. M. Svelii, Conclusions, op.ci.

88 W. Karpiska-Mizieliska, t. Smuga, op.ci., p. 43.89 E. Maleszyk, Internacjonalizacja polskich przedsibiorstw handlowych [Internationalization

of Polish trade companies], Gospodarka Narodowa 9/ 2007, p. 96.90 Resuls showed ha his form of invesmen corresponds wih low level of me expecaions.

Karaszewski, (ed.), op.ci., p. 342.91 Ibidem, p. 23.


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the hypohesis concerning he posiive inuence of allocaing capial abroadon he compeiiveness of Polish invesors was posiively veried. the companieshemselves compeed mainly hanks o he high qualiy of provided services and

goods. the Polish origin of he capial proved o have a posiive inuence on heimage of he company and i posiively affeced is developmen in he foreign mar-ke (conrmaion of he hypohesis ha a signican impac on he developmen ofcompanies wih Polish capial abroad is made by ransferable resources wihin heinvesmen packages from paren companies)92. the sudy, Success facors forPolish enerprises in he European Union markes published by he Warsaw Schoolof Economics demonsraed ha successful companies as a rule make use of he cosadvanage in comparison wih wesern eniies, as well as of heir relaions wih he

buyers, advanage of ime, repuaion and qualiy93. the resuls also show ha heso-called key compeences including developed echnologies and skills are a sourceof compeiion advanage for 30% of Polish companies operaing in he EU markes.these compeences are of a sysemic naure of cerain clusers combining possessedresources, relaions wih he ouside environmen (ousanding skills), compeences(echnologies and he know-how) and capaciies (e.g., learning, managemen)94. Allof hese allow for long-lasing advanages due o he possibiliy of achieving a cer-ain sequence of shor-lasing advanages95, which suggess ha hey are exible andadapable o he changing and dynamic marke condiions.

the cenral bank (NBP) predics ha in 2011 he inward FDI will increase o ca.12.7 billion Euro, whereas he Polish ouward FDI will reach ca. 2.1 billion Euro in

comparison wih 2.5 billion for 201096

. According o he analyses presened by heconsuling services, Akademia Rozwoju Sysemw Sieciowych he number of for-eign shops under he signboards of Polish brands will increase. the annual empo ofchanges migh reach15-20%97. the major incenive owards expansion in he formof franchising includes mainly success achieved in he counry. A presen over 40naional franchising neworks have been developing abroad.

According o he repor published by he end of March 2011 by he Insiue forMarke, Consumpion and Business Cycles Research and by he New York ColumbiaUniversiy, Polish foreign invesmen has been only slighly affeced by he crisis98.there was a drop from he level of 5.5 billion dollars in 2007 o abou 4.5 billion in2008 and an increase o he level of over 5 billion dollars in 2009. the consequencesof he crisis for he world economy mosly affeced he meal and mooring indus-

92 Ibidem, p. 348.93 Z. Piercionek, S. Jurek-Spie, Czynniki sukcesu polskich przedsibiorstw na rynkach Unii

Europejskiej [Success factors for Polish enterprises in the European Union markets], Warsaw 2006.94 Ibidem, p.10.95 Ibidem, p. 18.96 NBP : FDI in 2011 will amoun o 12.7 billion Euro, Forsal 26.11.2010 .

97Polish brands conquer Europe, afer DGP and Rzeczpospolia 15.11.2010.98 Orlen the largest foreign investor, Rzeczpospolia 31.03.2011.


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ries, whereas he chemical and perochemical indusries noed a kind of boom, andhe highes growh was fel by he producers of food, drinks and companies provid-ing business services. the ranking of Polish rms wih he larges asses abroad is

led by he fuel exracion companies, PKN Orlen and PGNiG99

.

CONCLUSIONS

Due o he small scale of direc invesmen made by Polish enerprises abroadhis issue has no been a subjec of special aenion in he economic lieraure 100.However, ogeher wih he developing paricipaion of Poland in he globalizaion

processes i should be expeced ha he volume of such invesmen will increase.Neverheless, he opinions ha Poland in he near fuure will become an exporer of

he ne capial in he form of FDI seem premaure. this conclusion sems from hefac ha: he ineres of foreign invesors in locaing heir capial in Poland remainshigh, he level of compeiiveness of he majoriy of Polish companies is sill low, heincenives o make FDI are insufcien (boh in he arge counries of he invesmenas well as on he par of he Polish governmen, e.g., via he guaranees and insur-ance of credis allocaed for such invesmen). three sages can be disinguished inhe policy supporing FDI among he naional business eniies101. the rs sageincludes aciviies conneced wih he liberalizaion of capial ow; he second sageinvolves passive promoion concerning making agreemens abou avoiding doubleaxaion and signing agreemens concerning he muual proecion of invesmens.When i comes o he hird sage involving acive promoion which includes grans,subsidies, suppor for foreign expansion and he funcioning of a promoion agency,i seems ha Poland has barely enered his sage.

According o predicions Polish companies have increased heir endency omake direc invesmen mainly in well developed counries102. In 2006 Europeancounries received 97.2% of all Polish foreign invesmen. I is difcul o regardPolish enrepreneurship in he EU counries, especially in he counries of he oldEU, as unique or peculiar. A he same ime however, i does no in wih he classi-cal paradigm of invesmen owing from a beer developed o a less developed

counry. On he one hand, here is relaively a lo of similariy beween he econo-mies of EU members. On he oher hand he speciciy of he siuaion sems fromhe fac ha he capial comes from a counry where i is a rarer facor which sands

99 the ranking included 19 companies which in 2009 possessed asses abroad worh over 10 bil-lion dollars and heir income from foreign sale amouned o 17 billion dollars. they had alogeher 275foreign branches in 50 counries where hey employed nearly 14,000 people. As many as 18 of hesecompanies have heir shares quoed on he Warsaw Sock Exchange, and wo companies are also quoedon a Sock Exchange abroad.

100 W. Karpiska-Mizieliska, t. Smuga, op.ci., p. 31-52; W. Karaszewski, (ed.), op.ci, p. 9.101 K. Kaloay, Outward, op.ci. , p.166.102 W. Karaszewski, (ed.), op.ci., p. 340.


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in opposiion o he radiional concepion of capial ow. As far as Polish direcinvesmen is concerned here is a need for furher research. the research should,among ohers, serve he purpose of idenifying, describing and classifying he be-

haviour and sraegies of Polish enerprises in he EU by making references o heexising heoreical paradigms which were discussed in he presen aricle103. Alsoi should esablish cerain regulariies occurring in his scope, and in is furher pari should formulae some recommendaions addressed o he acors engaged in he

process: poliicians, local decision-makers and he invesors hemselves.

103 Cf. he proposal poining o he need o work wihin he framework of Inernaional Business(IB) o develop classicaion and ypology. R. Aggarwal, J. Berrill, E. Huson, C. Kearney, What isa multinational corporation? Classifying the degree of rm-level multinationality, Inernaional

Business Review, In Press, Correced Proof, available online 17 December 2010, dae of access:02.03.2011.

MARTA GöTZ: Polish Foreign Direct Investment (FDI)

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