Journal of Management and Business Administration. Central Europe

Adventurous Foreign Direct Investment

Zdziarski, Michał Światowiec-Szczepańska, Justyna Troilo, Mike Małys, Łukasz

University of Warsaw | Poznań University of Economics and Business | Collins College of Business, School of Finance

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Abstract

Purpose: The aim of this paper is to explore the phenomenon of an advanced form of internationalization: foreign direct investment (FDI) in a distant location. We label this transaction “adventurous FDI”, and explain how this new concept is related to, yet distinct from, other widely studied theories: born global companies, the LLL model, and the Uppsala model. We propose a theoretical typology of adventurous FDI based on two critical factors for risk­taking: distance and embeddedness.

Methodology: We present a theoretical proposal of a typology of AFDIs. To support our proposal, we illustrate the typology with examples from a longitudinal study of foreign direct investments undertaken in the years 2007-2009 by Polish frms. Selection of the time period for this study is justifed by the fact that the number of FDI transactions and AFDIs has almost doubled in the observed time period. We apply methods of social network analysis to identify embeddedness of FDIs and use geographic distance measures to classify transactions on a distance scale.

Originality: Current theories of foreign direct investment (FDI) focus broadly on either gradual learning or instant globalization. We identify a new category which we term “adventurous FDI”. The distinctive features of adventurous FDI includes the exploration of many unknowns related to distant locations and the use of advanced internationalization forms. We propose that embeddedness in country networks is instrumental to adventurous FDI, as the rapid learning inherent in such network arrangements enables frms to overcome the ambiguity associated with vast geographic, psychic, and cultural distance.

Metadata

Journal Journal of Management and Business Administration. Central Europe 
Volume 25 
Issue 2 
Issue date 2017 
Type Article 
Language en
Pagination 117-138
DOI 10.7206/jmba.ce.2450-7814.198
ISSN 2450-7814
eISSN 2450-8829