Table of Contents

Internationalization of Firms from Economies in Transition

Internationalization of Firms from Economies in Transition

The Effects of a Politico-Economic Paradigm Shift

New Horizons in International Business series

Edited by Mai Thi Thanh Thai and Ekaterina Turkina

This book provides a detailed analysis of how and why firms from economies in transition internationalize and examines the effects of domestic politico-economic factors on this process.

Chapter 6: From the advanced transition environment to the international markets: key opportunities and challenges for MADARA Cosmetics

Arnis Sauka and Friederike Welter

Subjects: business and management, international business, economics and finance, development economics

Extract

Latvia, the country in which MADARA Cosmetics Limited was established, is located in Northern Europe on the coastline of the Baltic Sea. Latvia extends over an area of 64 589 square kilometres and has approximately 2 million inhabitants. Due in large measure to its favourable geographical location, Latvia has historically attracted the interest of many countries, mostly in the neighbouring area. After the collapse of the Soviet Union, Latvia regained its independence and became a parliamentary republic on 21 August 1991. It was at this point that the transition from a centrally planned economy to a market economy began in Latvia. According to the European Bank of Reconstruction and Development's (EBRD, 1994) definition, transition is about institutional change involving not only the advance of the private sector, but also a fundamental transformation of the role of the state, particularly with regard to the economic, financial and legal institutions underpinning the market economy. However, it should be noted that while that a market economy has core features, there is no unique destination for the transition process (EBRD, 1995). Given the different starting points and initial conditions of transition countries, there cannot be a single, unique route for transition. A priori, a large number of variables could influence transition paths and resulting patterns of institutional change.

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