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Journal of International Entrepreneurship

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12-06-2017

The impact of FDI on the performance and entrepreneurship of domestic firms

Author: Mico Apostolov

Published in: Journal of International Entrepreneurship | Issue 4/2017

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Abstract

This paper examines how foreign direct investments influence the performance and entrepreneurship of domestic firms, a crucial question for economies driven by incursion of exogenous factors and especially transition economies. The intent is to investigate the way foreign direct investments shape the capabilities of domestic firms; hence, for this purpose, we take Macedonia, a Southeast European economy, as a case study. We find that (i) foreign ownership has helped restructure and enhance the productivity of domestic firms, (ii) FDI has positive influence in reinforcing the creation of new firms, and (iii) in line with the established literature, a foreign investment is likely to influence the job seeker to get employed rather to start their own business. Overall, the results confirm the influence of foreign firms in assisting entrepreneurial activity. The impact of foreign investment is, in general, positive and tends to influence the restructuring process of domestic enterprises.

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In Macedonia (and most of transition economies) ‘limited liability company’ and ‘limited liability company one natural person’ are distinct legal forms to enter into the market i.e. to register and start new business, therefore most valuable indicator for ‘new firm’/ ‘firm entry’.

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Title: The impact of FDI on the performance and entrepreneurship of domestic firms
Author: Mico Apostolov
Publication date: 12-06-2017
Publisher: Springer US
Published in: Journal of International Entrepreneurship / Issue 4/2017
Print ISSN: 1570-7385
Electronic ISSN: 1573-7349
DOI: https://doi.org/10.1007/s10843-017-0205-4

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