Mariusz-Jan Radlo

Outward Foreign Direct Investments and Emerging Multinational Companies from Central and Eastern Europe

This paper summarizes a research project devoted to analyzing the development of outward foreign direct investment (OFDI) and emerging multinational companies from Visegrád countries: The Czech Republic, Hungary, Poland, and Slovakia. After several years of foreign direct investment inflows to central and eastern European countries in recent decades, OFDI has appeared and grown dynamically from these economies. The Visegrád countries are among the leaders in that respect. This type of internationalization is affecting mainly Visegrád neighboring countries and other countries in the region. The concentration of investing companies and transactions is quite high in all four countries, and this determines both the sector and target country composition of OFDI. Intra-Visegrád investments, mainly by pairs of countries, are especially significant.

Emerging Multinationals and Outward FDI Development

The aim of this paper is to shed light on the Polish outward foreign direct investments (OFDIs) with special attention on the growing interest of many Polish companies to expand abroad utilizing equity-based modes of entry. The paper shows that the increase of Polish OFDI in recent years reflects the growing ability and willingness of Polish companies to expand mainly to European markets. It is also observed that the emerging Polish multinationals primarily expand to regional markets of Central, Eastern, and Southeastern Europe as well as Germany. The major motivation for the expansion was to increase market power and access to the market. The current economic crisis resulted in a deceleration of OFDI flows. However, in the case of Polish companies, the deceleration is not as high as one might expect and in 2008 and 2009, Polish companies made a relatively high number of cross-border deals. The paper also analyzes three cases of companies built from scratch in the transition period that now belong to the group of emerging Polish multinationals. When analyzing these cases, it can be seen that there were two stages in their development: during the first stage (approximately one decade), these companies focused on the development of their position in their home market; after they acquired a relatively strong position in the home market, they decided to expand abroad. Their first choice when expanding abroad was to build a strong position in regional markets of the Central and East European countries.

Motywy inwestycji zagranicznych polskich przedsiębiorstw

The aim of this study was to examine the motives of foreign direct investment (FDI) of Polish enterprises. Our studies have confirmed that the market seeking and – to a lesser extent – resource seeking motives are most important for Polish companies investing abroad. The search for efficiency is still not as significant as above factors. The study also shown the importance of geographical distance – this is reflected by concentration of Polish FDI in neighboring countries. We also identified the differences in motives to invest across various sectors and equity based entry modes.

Determinants of FDI and Entry Modes of Polish Multinational Enterprises

The aim of this study was to examine the motives of foreign direct investment (FDI) of Polish enterprises. Our studies have confirmed that the market seeking and – to a lesser extent – resource seeking motives are most important for Polish companies investing abroad. The search for efficiency is still not as significant as above factors. The study also shown the importance of geographical distance – this is reflected by concentration of Polish FDI in neighboring countries. We also identified the differences in motives to invest across various sectors and equity based entry modes.

Outsourcing/Off-Shoring: A Way to Boost Restructuring in the Polish Banking Sector?

Outsourcing in banking in Poland is relatively new however quickly growing practice. The major reason for the rise of outsourcing is the fact that it enables to restructure costs and assets of bank and make the banking companies more profitable and competitive. Thanks to outsourcing banks can reduce costs, improve their focus on core competencies, reduce time to market and accelerate reengineering benefits. Banks in Poland outsource mainly supporting activities including transport, IT, trainings, distribution and logistics, sales and marketing, real estate or facilities management (46,7%). Outsourcing of contact centers, administration and human resources is less popular but still present in many banks. Many banks outsource also document scanning, security guard services, processing of cash, documents, production and personalization of credit cards, ATM service and mailing of bank documents. Among services expected to be outsourced within the next two years most frequently enumerated were IT services, distribution and logistics, transportation, human resources and contact centers.

Offshoring and Outsourcing as New Challenges for Industry in the EU

The aim of this paper is to show the impact of offshoring and outsourcing on the industrial structures of the EU Member States’ economies. This chapter adds value to the existing research in three areas. Firstly, it shows the development of offshoring and outsourcing in the EU in the years 1995–2011. Secondly, it shows changes in the industrial structure of the EU in the same period. And, thirdly, it indicates the impact of offshoring and outsourcing on the changes in industrial structure of the EU economies. Our analysis shows that in the years 1995–2011 there was a significant increase in the share of trade in intermediate goods exports and imports in all 28 EU Member States. These trends were also visible when analyzing international trade in value added. In 1995–2011 the domestic value added share of gross exports in EU-28 fell, while the foreign value added share of gross exports increased. In the analyzed period we could observe not only the growing importance of offshoring in general, but also the growing importance of service industries in both national economies and in the international production fragmentation.

Offshoring, Outsourcing, Production Fragmentation: Definitions, Measures and Origin of the Research

To explore and explain the phenomenon of offshoring, outsourcing and production fragmentation we should start with the clarification of basic concepts used to describe the phenomena associated with them. We also have to identify origins of the research on these phenomena and last, but not least, present sources of data and precise measures that we can use in our own analysis. Therefore, the aims of this chapter are to review and clarify the terminology describing offshoring and outsourcing, to show the origins and the main areas of research on these phenomena and to present sources of statistical data and measures used to analyze production fragmentation. The research presented in this section is primarily based on literature studies. The first section is devoted to the analysis of terminology as well as of the different classifications of phenomena related to offshoring, outsourcing and production fragmentation. In this section we also propose the precise terminology we will use in this book to describe offshoring and outsourcing. In the second section we present the origins of research on offshoring and outsourcing and the main research problems addressed by various authors. In the final part of this chapter we present sources of statistical data and metrics used by various researchers to measure and analyze offshoring and outsourcing.

Offshoring and Outsourcing in Economic Theories

The variety of theoretical perspectives and the tendency to apply a few economic theories at the same time to explain offshoring and outsourcing are features of the vast majority of the production fragmentation explanatory models and empirical research on these issues. Consequently, most of the research on production fragmentation is based on at least two theories, and their selection depends on the level of analysis (microeconomic versus macroeconomic, global versus local, and so forth), on the research question posed and on the personal preferences of the author. The reason for this situation is that these phenomena are very complex and multidimensional, thus their analysis should be done with a holistic approach. This also means that no single theory on economics or management is able to explain the nature of all aspects of production fragmentation.

Production Fragmentation in the World Economy

The purpose of this chapter is to present the main trends regarding the scale and structure of international production fragmentation — using the available statistical data on international trade, foreign direct investment and international input-output tables. In addition, we will present major implications for the coming years arising from current trends in offshoring for the development of the world economy and national economies. To achieve the above objectives quantitative analysis of statistical data mainly will be used. Moreover, in this chapter we will present findings of key research describing the impact of offshoring on wages, employment and labor productivity. However, it should also be noted that the measurement of the scale and structure of international fragmentation is not an easy task, and the main obstacles faced by researchers of this phenomenon relate the limited availability of data.

Explaining and Modeling Offshoring and Outsourcing in Enterprises

Explaining captive and non-captive production fragmentation in enterprises requires deeper analysis of the evolution of: the production fragmentation that has taken place in recent decades; the motives of such fragmentation; and the factors influencing the location of various elements of production chains. Therefore, the key goals of this chapter include: presenting and explaining the evolution, in recent decades, of the scope and structure of offshoring and outsourcing in enterprises — identifying and explaining motives for production fragmentation and the factors influencing the choice of location for performing various activities; and, last but not least, discussing various explanatory models of production fragmentation in enterprises and presenting a model that explains decisions taken in the firm about production fragmentation.