Foreign market selection by Russian MNEs – beyond a binary approach?

Abstract

Purpose

The purpose of this paper is to address the internationalization of Russian multinationals by critically challenging existing assumptions about “springboard” foreign market selection by emerging market firms.

Design/methodology/approach

The authors studied foreign market selection decisions for 497 international merger and acquisition (M&A) and joint venture (JV) deals completed by Russian multinational enterprises (MNEs) between 1997 and 2009. The statistical model tests the impact of the geographic, political and economic distances of the host country from Russia on Russian MNEs' foreign market selection decisions.

Findings

Contrary to existing assumptions, the host country's geographic closeness to Russia, and its being an ex‐USSR republic or a tax haven, positively affected the country's probability of attracting an M&A or JV deal by a Russian MNE, while the similar level of economic development did not significantly influence the MNEs' foreign market selection decisions. The patterns of significance among the explanatory variables vary for Russian MNEs operating in the natural resources industries.

Research limitations/implications

Further studies may extend the observation period, enlarge the database with Greenfield and export deals by Russian MNEs, and add cross‐country cultural distances to the explanatory variables.

Practical implications

Russian managers should consider the “distances” that might influence firms' foreign investment decisions. This paper also allows host country governments willing to formulate policies aimed at the attraction of Russian outward foreign direct investments to obtain a better understanding of Russian MNEs' international strategies.

Originality/value

One of the few quantitative studies on the topic, this research suggests that Russian MNEs choose their own means of foreign market selection, combining gradual and leapfrog approaches to internationalization.

Citation

Annushkina, O.E. and Trinca Colonel, R. (2013), "Foreign market selection by Russian MNEs – beyond a binary approach?", Critical Perspectives on International Business, Vol. 9 No. 1/2, pp. 58-87. https://doi.org/10.1108/17422041311299950