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Global crisis and activities of multinational enterprises in new EU member states

Sergey Filippov (Faculty of Technology, Policy and Management, Delft University of Technology (TU Delft), Delft, The Netherlands)
Kalman Kalotay (United Nations Conference on Trade and Development, Geneva, Switzerland)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 27 September 2011

Abstract

Purpose

The purpose of this paper is to examine the potential impact of the 2008 economic crisis on foreign direct investment (FDI), especially in the new member states of the European Union. Particular attention is paid to the activities of subsidiaries of multinational enterprises (MNE), which can follow different scenarios as a response to the crisis, including a reorganisation of their production systems, and a reduction or closure of activities.

Design/methodology/approach

The analysis is grounded on various streams of literature, including international business studies and research on transition. Evidence is derived from UNCTAD data, interviews and desk research. The method of descriptive analysis has been followed, combined with theoretical insights, conceptual discussions and case study evidence.

Findings

While the full magnitude and consequences of the crisis are yet to be extensively analysed, the authors' preliminary findings suggest that the response of MNE subsidiaries to the crisis hinges critically upon the type and the industry of such subsidiaries. Export platforms in automotive industries have been hardest hit. However, there are indications of the qualitative development of subsidiaries in other industries, despite the crisis, as well as growing attractiveness of new EU members FDI in services.

Research limitations/implications

This paper is an explorative study on the impact of the crisis on subsidiaries. More academic research should be conducted to understand this phenomenon, especially when the full magnitude of the crisis can be assessed.

Practical implications

The authors' analysis points at important policy implications. The authors challenge the view that rising economic nationalism would be the right answer to the problems created by corporate restructurings. Further, the authors advocate selective host government support to subsidiaries, especially aimed at retaining R&D departments and skilled workforce.

Originality/value

So far, the global economic crisis has been analysed mostly in consultancy reports and in studies focusing on the macroeconomic impact. However, to the authors' knowledge, no academic study has examined the issue of MNE subsidiaries' responses to the crisis.

Keywords

Citation

Filippov, S. and Kalotay, K. (2011), "Global crisis and activities of multinational enterprises in new EU member states", International Journal of Emerging Markets, Vol. 6 No. 4, pp. 304-328. https://doi.org/10.1108/17468801111170338

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited