Outward FDI in the Context of Forced Internationalisation: Greek Investments in South-Eastern Europe

Abstract The thesis explores the dynamics and determinants of Greek outward foreign direct investment (OFDI) in Bulgaria and Former Yugoslav Republic of Macedonia (FYROM). Greek investors do not possess strong ownership advantages, they face adverse home market conditions and yet they have expanded into neighbouring countries. This situation is not explained by the mainstream and emerging literature. Hence, we propose a framework based on push and pull factors which we test at the country, industry and firm levels. Pull factors include the advantages of firms and host countries advantages, while push factors include home market disadvantages and weak advantages of firms. The research is based on an extensive face-to-face survey of 152 Greek OFDI firms (in Bulgaria and FYROM) and employs quantitative methods (descriptive statistics and logistic regression models) as well as case studies. At the country level, we find that beside significant pull factors, adverse demand conditions represent a significant push factor. At the industry level, we examine four industries and check for differences and similarities in their characteristics and their relevance using the Ownership-Location-Internalization (OLI) framework. We show that OLI variables vary significantly across the four industries and that new variables which are not in OLI framework also matter. Finally, we identify four main types of Greek investors: crisis, healthy, satellite and lead and we explore differences in the drivers of their OFDI. The thesis provides a conceptual and empirical contribution to the literature by proposing an alternative framework to explain OFDI based on integrating the OLI and Linkage-Leverage-Learning (LLL) and Comparative Ownership Advantage (COA) models. A joint push and pull model might indicate when FDI at country, industry or firm level, is expansionary or escapist, that is, whether the push factors lead to escape FDI "forced internationalisation" (i.e. OFDI affected also by negative home market conditions), or whether pull factors lead to expansionary FDI