Strategy Review for Central and Eastern Europe: Strategic Responses of Foreign Multinational Corporations to the Recent Economic and Financial Crisis

The economies of Central and Eastern Europe were hit particularly badly by the global financial and economic crisis of 2008–2009. This raises the question of whether the severe economic downturn had any effect on the strategic orientation of foreign multinational corporations operating in Central and Eastern Europe. The purpose of the study is to contribute to the discussion of the effects of the recent crisis on strategies of multinational corporations. The crisis brought the successful economic catching-up process of the reforming countries over the previous decade to an abrupt halt, shattering the image of Central and Eastern Europe as a growth region. Multinational firms are now in the process of reviewing their original internationalization strategies for the region. The author argues that the business model that guided the expansion into Central and Eastern Europe still remains valid.     

Eastern-Western supplier-customer relationships in agricultural machinery industry: results of an empirical investigation in the Czech Republic,Hungary, Romania,Ukraine, and Germany

International trade between Germany and the young reform states in Central and Eastern Europe is growing rapidly. Germany is the most important trading partner for nearly all of the Central and Eastern European countries. Nevertheless, there are relatively few empirical studies concerning purchasing activities of western manufacturers in Central and Eastern Europe. Especially the characteristics of successful relationships between Central and Eastern suppliers and their western customers have not been addressed. This paper presents results of a survey carried out in the Czech Republic, Romania, Hungary, Ukraine and Germany. The research reported, contributes towards answering the following research questions. (1) What are the reasons for establishing Eastern-Western supplier-customer relationships? (2) What are the characteristics of German customers buying in Central and Eastern Europe? (3) Which attributes are prominent by Eastern suppliers? (4) What are the ingredients of a successful supplier-customer relationship?The survey showed that many successful relationships between German manufacturers and Central European suppliers have been established. The importance of these relationships for both suppliers and customers is shown by the average share of materials by value bought in Central and Eastern Europe, the high specificity of the purchased materials, the types of contracts employed, and the extent of support activities. Furthermore, the study has identified the requirements and numerous attributes of successful Eastern-Western supplier-customer relationships.     

Increasing the Validity of Post Command Economy Research and Application

The demise of communism in the post command economies (PCEs) has created considerable interest from both academics and practitioners. As a result, a myriad of Western marketing academics and practitioners have been exploring the region. Despite the abundance of literature on cross-cultural research and practice, many PCE researchers have failed to consider fundamental issues related to cross-cultural/cross-national research design. This paper highlights a number of problems researchers face when investigating PCE regional phenomena. In particular, the authors discuss the issue of commonality and demonstrate how the use of multivariate analyses can be effectively used to: (1) identify more homogenous groupings of PCEs; and, (2) validate marketing constructs developed outside the PCEs. Though based on analyses of the interdependence of political and economic variables, the authors identify sub-groupings of countries that largely reflect traditional geo-cultural groupings: the Baltics, Central Europe, Eastern Europe, Russia and Peripheral, and Ccntral Asia. The authors also discuss traditional cross-cultural research approaches and demonstrate how the operationalisation of appropriate approaches can improve the application of regional marketing stratey and validity of PCE findings.     

The Achievement of Privatization Objectives in Central and Eastern Europe

Summary

Privatization is an essential part of the transition process in Central and Eastern Europe. In this process the major stakeholders have a variety of different objectives. The conventional Western literature views of the objectives of governments, investors, and privatized companies are identified. The research then studies the importance ol'thcsc in Central and Eastern Europe and the degree to which they have been achieved in Hungary, Poland, and Slovcnia for former state-owned enterprises (SOEs) which are now fully or partly private and for organic private firms. The paper concludes that the major objectives are more likely to be achieved by fully privatized former SOEs.     

A perspective of marketing in central and Eastern Europe

The transition of Central and Eastern Europe toward a market economy affords new opportunities but also new risks to international marketers. Based on the work of the authors in the region, this article presents a perspective of the economic shifts which have taken place in these countries. A review of the available international marketing options is offered and a framework for the evaluation of market entry and marketing mix strategies which accommodate these shifts is developed. Emphasis is placed on the need for marketers to go beyond purely commercial criteria in their decision making, by considering the long-term social and economic repercussions of their actions. 1997 John Wiley & Sons, Inc.     

Entering central and eastern Europe: Risks and cultural barriers

Scholars have argued that the slow pace of Western investment in Central and Eastern Europe may be caused by two entry barriers: cultural influences and high international risks. This study examines the influence of culture and international risks on the entry mode choices of Western European firms entering Central and Eastern European markets since the fall of the Iron Curtain in 1990. Evidence from 227 Western European companies shows that, for firms entering Central and Eastern Europe, investment risk perceptions are important determinants of mode choice while culture and contractual risk have only minimal influence. Managerial implications are also discussed. © 1998 John Wiley & Sons, Inc.     

A Crossnational Prediction Model for Business Success

In this study, the Lussier (1995) success prediction model, originally developed using U.S. data, is tested using a sample of firms from Central Eastern Europe. The same factors found to be predictors of success in the U.S. (staffing, education level, use of professional advice, and planning) were also predictors of success and failure in Central Eastern Europe. All these factors have to do with the firm's human resources. These findings should lead to reconsideration of preconceptions existing in Central Eastern Europe regarding small business, as in many of its countries it is commonly believed that human resources have little to do with business success and failure.     

Institutional environment and firms' sources of financial capital in Central and Eastern Europe

The external business environment is a major determinant of which sources firms select to obtain financial capital. We examine how the regulatory, political, and financial dimensions of the institutional environment influence the extent to which firms rely on informal sources of financial capital. The analyses of data from 2869 firms in twenty-six transition economies in Central and Eastern Europe (CEE) indicate that ineffective regulatory system, underdeveloped financial system, and government corruption are strong determinants of firms' reliance on informal channels for financial capital. We also find that smaller firms are more vulnerable when the local financial system is underdeveloped and the regulatory institutions are less effective in these transition economies. A subgroup analysis of firms' forms of establishment shows that private firms are sensitive to the level of development of the local financial system and state-owned enterprises are particularly sensitive to the degree of corruption.     

Eu widening to the East: Must latin America be concerned?

The pending widening of the European Union to the East has revived concerns in Latin America that its trade and foreign direct investment relations with the EU may suffer as a result. Trade patterns suggest, however, that Latin America's exports to the EU are complementary to the exports of Central and Eastern European countries and the new investment opportunities in Central and Eastern Europe appear to be inducing additional foreign direct investment, rather than causing its diversion.     

Collaborative Learning Instrument in Teaching Entrepreneurship Issues

Abstract

Due to the shortcomings associated with the largely passive learning experience currently experienced by students at the University level in Central and Eastern Europe, active learning approaches have been promoted by educationalists as a more effective method for teaching business and entrepreneurship. This paper contributes to this literature by outlining a collaborative learning instrument involving active learning that can be used to teach entrepreneurship at university level in Central and Eastern Europe. This instrument illustrates the role of entrepreneurship and proprietorship in both a well-established market economy and in the post-communist economies of Central and Eastern Europe. Students outcomes should include the following: firstly, the recognition that the emerging small business sectors of the post-communist economies have much potential as a vehicle for economic growth and for developing capitalist forms of economic production; secondly, an understanding that entrepreneurial behavior is an essential element in the development of the small business sector; thirdly, an ability to identify traits common to successful entrepreneurs; and fourthly, they will develop and practice a variety of entrepreneurial skills themselves that may make them aware of their potential as entrepreneurs.     

No Risk,No Fun? Foreign Direct Investment in Central and Eastern Europe

In the course of transition from planned economies to market economies, foreign direct investment played an important role and contributed to international economic integration in Central and Eastern Europe. This paper investigates the determinants of FDI in Central and Eastern Europe, a region which in large part still lacks strong institutions. The empirical analysis presented in this article fi nds evidence that country default risk is not necessarily a hindrance to FDI. In contrast, factors like market size, labour cost and trade liberalisation do matter for FDI engagement in the region.     

Social policy as an institutional transformation problem

In the transition from the command economy to the market economy it is becoming more and more urgent for the countries of Central and Eastern Europe to readjust their social policies and reorganise their social security systems. In doing so, the conflict between social solidarity and individual self-responsibility must be solved.     

Foreign investor strategy development in the central and eastern European context

Investment conditions in the transition economies of Central and Eastern Europe favor long-term strategic investments. Increasing competition pressures in the saturated West European beer markets coupled with shrinking demand challenged Interbrew SA, Belgium to enter the emergent prospective markets of Central and Eastern Europe by the acquisition of former state-owned enterprises. The study of Interbrew's case shows the linkages existing between investor internationalization strategy, motives, strategy implementation, and adaptation in the highly volatile markets of Hungary and Bulgaria. This case represents a good example of slow reactive strategy development in the Hungarian environment leading the investor to the loss of its first mover advantage. Using similar motives for its acquisitions in Bulgaria, Interbrew has successfully implemented a proactive adaptation of its initial Central and Eastern European strategy to the Bulgarian environment. The lessons from the case can be used by foreign investors to increase their chances for success in FDI acquisition in transitional economies. © 1999 John Wiley & Sons, Inc.     

Investing in Eastern Europe: Two case histories

This feature is in three parts: the first two are case histories of the contrasting experiences of two Western companies which expanded abroad for the first time in the mid-1990s, into different countries in Eastern Europe. One is so far successful, the other not. The third section draws out the implications of these experiences: although still quite risky, investment in Central and Eastern Europe can already be made to pay by firms that enter as part of a well-conceived and financed global strategy. Particular benefits are lower labour costs and access to untapped markets.     

The EC and the changes in Central and Eastern Europe

Political developments in Central and Eastern Europe and the process of German unification present the EC with a major challenge. How has the EC reacted to these changes so far? What contribution can the eC make to overcoming the division of Europe?     

Enlargement and the Textiles,Clothing and Footwear Industry

The textiles, clothing and footwear (TCF) industry is a labour intensive industry, strongly determined by globalization and easy relocation to low‐cost countries. Hence also in the European Union this industry is relatively more important in the low‐wage regions of the EU‐Southern periphery. With the envisaged enlargement, however, these countries fear a further shift of the sector to Central and Eastern Europe as these countries still have a comparative advantage in terms of low labour costs. The present article investigates whether this fear is justified, looking at three main aspects: first at the position and history of the TCF sector in the European Union and its role in the EU periphery, second at the sector in the Central and Eastern accession countries, and third at gobalization issues. The second aspect is dealt with in great detail, as development trends in the Central and East European countries are important and telling. Much has happened during the 15‐year (and more) period between the collapse of communism and the EU membership in this region, most important the integration to the EU by the means of trade, in particular outward processing trade. These developments mainly seem to determine future trends in an enlarged Europe. Overall however, future prospects have to be seen in a global context, strongly influencing the sector via changes in global trade policies.     

The Reorientation of Transition Countries’ Exports: Changes in Quantity, Quality and Variety

Exports from transition countries to market economies have increased considerably since the fall of socialism. The countries of Central and Eastern Europe have generally been more successful in this regard than the countries of the Commonwealth of Independent States. There are also considerable differences between countries within both the CEEC and the CIS, however. The following paper uses a variety of measures to determine the factors behind these cross-country differences.     

European telecommunications markets

Today, the telecoms sector is not only one of the fastest growing sectors in the world but also one of the most rapidly changing sectors. In Western Europe different strategies under different regulatory frameworks are being pursued in the effort to meet the challenges posed by this. In Central and Eastern Europe, telecommunications networks are still extremely underdeveloped. What lessons can the transforming economies draw from the experiences of Western European countries?     

Special economic zones: Shortcut or roundabout way towards capitalism?

The experiences of developing countries suggest that special economic zones (SEZs) might be appropriate instruments for accelerating the economic restructuring of Central and Eastern Europe. What functions could SEZs fulfil in the transformation process? What conditions must be met if they are to be successful?     

Technology transfer and institutional development in Central and Eastern Europe

The transfer of technology from developed countries to emerging markets has been of central interest to MNCs. This paper examines the problems associated with technology transfer in the context of Central and Eastern European countries. Contrary to a common perception of the region, we argue that different country institutional characteristics are determinants of technology transfer. By outlining the recent socioeconomic changes in the region, we consider the adoption of essential market institutions and the specific norms of regional integration with the European Union as these most important determinants. The paper concludes with the overview of potentially successful technology transfer strategies for MNCs interested in investing in the countries of Central and Eastern Europe.