Internationalization of Estonian Manufacturing Enterprises: Are Foreign Investors Dictating the Rules of the Game?

Internationalization of Estonian enterprises started at the beginning of the 1990s. Several development plans and strategies that were suggested by Estonian businessmen and politicians at the beginning of 1990s considered Estonia’s role to be a link between East and West, namely between Western European countries and Russia. In reality, Estonia’s role has been to create a linkage between the Nordic countries and Latvia and Lithuania. Therefore, rather than acting as a mediator between two regions with a huge market potential, Estonian firms have limited their activities to meeting the demand of relatively small countries (Sweden, Finland Latvia, and Lithuania). This shift in strategies was mainly caused by the Russian crisis and implementation of double tariffs by Russia. Another reason for the selection of smaller target markets lies in the foreign owners’ strategies — they considered the risk level in the Russian market to be too high and chose to enter the Baltic countries.