The Effects of a Politico-Economic Paradigm Shift
New Horizons in International Business series
Edited by Mai Thi Thanh Thai and Ekaterina Turkina
Chapter 2: State-controlled multinationals from transition economies: evidence from Poland
The purpose of this chapter is to examine how the Polish transition from communism to democracy and a market economy shaped the internationalization process of KGHM, a state-controlled local company that in 2011 completed the largest outward foreign direct investment (OFDI) in Polish history. Drawing on agency theory, the resource-based view (RBV) and institutional theory, I examine the motives behind the company's foreign investments, its competitive advantages and the challenges it faced while going global. Specifically, I investigate the role of the state and modern capital markets in the process of internationalization of a state-controlled company from a transition economy. The chapter is organized as follows. The first section describes the peculiarities of the Polish transition from communism to democracy and a market economy. The second section presents a literature review in three main areas: theoretical foundations of research on Central and Eastern Europe (CEE) companies, trends in Polish foreign direct investment (FDI) and empirical studies on the internationalization of state-controlled companies from emerging economies. The third section discusses the research method for the study of KGHM. The ensuing sections discuss the development of KGHM, its internationalization process, the motives for its internationalization and the roles of domestic institutions and resources in its internationalization. The last section provides concluding remarks and addresses the implications of the study presented in the chapter.
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