Dissertationes Rerum Oeconomicarum Universitatis Tartuensis 8 Dissertationes Rerum Oeconomicarum Universitatis Tartuensis 8
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DISSERTATIONES RERUM OECONOMICARUM UNIVERSITATIS TARTUENSIS 8 DISSERTATIONES RERUM OECONOMICARUM UNIVERSITATIS TARTUENSIS 8 THE INTERNATIONALIZATION OF FOREIGN-OWNED ENTERPRISES IN ESTONIA: AN EXTENDED NETWORK PERSPECTIVE TIIA VISSAK The Faculty of Economics and Business Administration, the University of Tartu, Estonia This dissertation is accepted for the defense of the degree of Doctor of Philosophy (in Economics) on April 16th 2003 by the Council of the Faculty of Economics and Business Administration, the University of Tartu. Supervisor: Professor Janno Reiljan (PhD), University of Tartu, Estonia Opponents: Professor Jan-Åke Törnroos (PhD), Åbo Akademi University, Finland Erik Terk (PhD), Director of the Estonian Institute for Futures Studies The public defense of the dissertation is on June 18th 2003 at 14.00 in room B306, Narva Rd. 4, Oeconomicum, the University of Tartu. The publication of this dissertation is granted by the Faculty of Economics and Business Administration, the University of Tartu. © Tiia Vissak, 2003 Tartu Ülikooli Kirjastus www.tyk.ut.ee Tellimus nr 279 TABLE OF CONTENTS THE LIST OF AUTHOR’S PUBLICATIONS AND CONFERENCE PRESENTATIONS ....................................................................................... 7 INTRODUCTION ......................................................................................... 10 1. THE THEORETICAL CONTEXT OF THE INTERNATIONA- LIZATION OF FOREIGN-OWNED FIRMS .......................................... 17 1.1. The models of pre-network internationalization............................... 17 1.1.1. The Uppsala and innovation-related internationalization models..................................................................................... 17 1.1.2. The other approaches to pre-network internationalization ..... 24 1.1.3. The importance and limitations of the literature on pre- network internationalization ................................................... 30 1.2. The importance of networks for foreign-owned companies’ internationalization ........................................................................... 35 1.2.1. The literature on the importance of networks......................... 35 1.2.2. The impact of (foreign owners’) networks on internationalization ................................................................. 40 1.2.3. The importance and limitations of the literature on the importance of networks (for internationalization) .................. 46 1.3. The impact of firms’ and their foreign owners’ characteristics on the foreign-owned companies’ internationalization.......................... 50 1.3.1. The role of firms in their foreign owners’ networks............... 50 1.3.2. The role of foreign-owned firms’ entrepreneurial behavior ... 55 1.3.3. The importance and limitations of the literature on the impact of firms’ characteristics on internationalization ........ 59 2. THE INTERNATIONALIZATION OF FOREIGN-OWNED COMPANIES IN ESTONIA: EMPIRICAL EVIDENCE AND DISCUSSION OF THE RESULTS.......................................................... 64 2.1. The research outline for exploring the internationalization of foreign-owned firms in Estonia......................................................... 64 2.1.1. The background of Estonian firms’ internationalization ........ 64 2.1.2. Three propositions for the empirical analysis......................... 69 2.1.3. Case study methodology......................................................... 73 2.2. The internationalization of seven foreign-owned enterprises in Estonia: a case study.......................................................................... 77 2.2.1. The case firms’ internationalization process .......................... 77 5 2.2.2. The impact of networks on the internationalization of the selected firms .......................................................................... 90 2.2.3. The impact of the case companies’ and the foreign owners’ characteristics on their internationalization ............................ 101 2.3. Discussion of the foreign-owned firms’ internationalization in the context of seven Estonian cases........................................................ 112 2.3.1. The validity of the studies in internationalization .................. 112 2.3.2. The validity of the literature on the importance of networks, firms’ and their foreign owners’ characteristics..................... 117 2.3.3. The internationalization of foreign-owned firms: a generalization from the previous chapters.............................. 124 CONCLUSIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH................................................................................................... 130 REFERENCES .............................................................................................. 141 APPENDICES ............................................................................................... 177 Appendix 1. A selection of internationalization models ........................ 177 Appendix 2. The classification of organization forms ........................... 182 Appendix 3. Reasons for participating in and avoiding networks and strategic partnerships......................................................... 183 Appendix 4. The classification of subsidiary roles ................................ 185 Appendix 5. The global and CEE economic environments ................... 191 Appendix 6. The Estonian investment climate....................................... 192 Appendix 7. The Estonian investment, balance of payments and foreign trade structure...................................................... 194 Appendix 8. The purposes and types of theory-building activities........ 198 Appendix 9. Some examples of previous case studies on firms’ internationalization, networks and/or entrepreneurship .... 199 Appendix 10. The questionnaire used for the seven interviews (pre-prepared questions).................................................... 200 Appendix 11. The case firms and their foreign owners: additional evidence............................................................................. 201 Appendix 12. The validity of the examined research streams.................. 205 KOKKUVÕTE ............................................................................................. 207 CURRICULUM VITAE ............................................................................... 220 6 THE LIST OF AUTHOR’S PUBLICATIONS AND CONFERENCE PRESENTATIONS I. Chapters in monographs 1. Vissak, T. (1998), Otseste välisinvesteeringute mõju ekspordile, in U. Varblane (ed.), Otsesed välisinvesteeringud Eesti majanduses, Tallinn: Eesti Välisinvesteeringute Agentuur, pp. 103–119. 2. Vissak, T. (2001), The impact of foreign direct investments on host country’s exports, in: U. Varblane (ed.), Foreign Investments in the Estonian Economy, Tartu: Tartu University Press, pp. 269–306. 3. Vissak, T. (2002), The role of FDI in outward internationalization of Estonian firms: A network perspective, in: J. Larimo (ed.), Entry and Marketing Strategies into and from Central and Eastern Europe, Proceedings of the University of Vaasa, Report 87, pp. 266–285. 4. Vissak, T. (2002), The role of inward FDI in internationalization of six affiliates in Estonia: A network perspective, in M.V. Jones and P. Dimitratos (eds), Emerging Paradigms in International Entrepreneur- ship, Aldershot, UK: Edward Elgar, forthcoming. II. Articles in international journals 1. Vissak, T. (2001), The role of inward FDI in internationalisation of CEE enterprises, Ekonomika ir Vadyba / Economics & Management, 2 (5), 106–114. 2. Vissak, T. (2002), The impact of strategic alliances on CEE firms’ success or failure, Transformations in Business & Economics, 1 (1&2), pp. 58–68. III. Other articles 1. Vissak, T. (1999), Otsesed välisinvesteeringud: poolt või vastu? Eesti Majanduse Teataja, No. 7/8, pp. 12–14. IV. Conference publications1 1. Vissak, T. (1999), Do foreign direct investments have an impact on Estonian exports? Transformation of Economic and Political Systems in the Baltic Sea Region. Selected Student Papers, Tartu, pp. 165–173. 1 From this list, nine articles (No. 1, 3, 4, 5, 6, 10, 11, 12 and 14) have been presented at conferences. 7 2. Vissak, T. (2000), Foreign direct investments and export performance: A network perspective, Economics & Management — 2000, Kaunas, Lithuania, pp. 507–509. 3. Vissak, T. (2000), Strateegilised liidud — võimalused ja ohud, Kaasaegsed suundumused Eesti juhtimisteaduses, Tartu, pp. 110–115. 4. Vissak, T. (2000), A network approach to FDI impact on transition economies export performance, EACES Paris Workshop “Impact of FDI and Know-How Transfer on Restructuring, Spin Off and Networks in Eastern European and Asian Transition Economies”, Marne-la- Vallee, France, pp. 35–44. 5. Vissak, T. (2000), FDI and export performance in CEE: A network perspective, CREEB Sixth Annual Conference “Corporate and Organizational Restructuring”, Buckinghamshire, the UK, pp. 424– 454. 6. Vissak, T. (2000), Otsesed välisinvesteeringud — võimalus KIE üle- minekumaade kaubandusbilansi parandamiseks, Eesti Vabariigi majan- duspoliitika tulemuslikkus ja Euroopa Liit, Tallinn: Mattimar, pp. 496– 503. 7. Vissak, T. (2000), Foreign direct investments as a tool for quickening CEEC economic integration: Pro & con, The Eighth Annual Internatio- nal Conference “Business and Economic Development in Central and Eastern Europe: Implications for Economic Integration into Wider Europe”, Brno, the Czech Republic, pp. 706–721. 8. Vissak,