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Global Expansion Strategies for Icelandic, Irish and Israeli Multinationals

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Submitted By mashnoon619
Words 8284
Pages 34
Global expansion strategies for

Icelandic, Irish and Israeli Multinationals

By

Asta Dis Oladottir

Bersant Hobdari

Marina Papanastassiou

Evis Sinani

Department of International Economics and Management

Copenhagen Business School

Frederiksberg

2000-Denmark

Draft, October 2008

ABSTRACT

The aim of the paper is to analyze the overseas activities of multinational corporations (MNCs) coming from small open economies (SMOPEC), their international or global expansion strategies behind outward foreign direct investments. Using a sample of 1089 subsidiaries, of which 187 are Icelandic subsidiaries, 444 are Irish subsidiaries and 458 are Israeli subsidiaries. We explore the geographical and industrial pattern of their direct investment strategies. Our analysis reveals several important facts. Firstly, most of the outward foreign direct investment (OFDI) is directed in finance, insurance and real estate services for all of the countries. Secondly, by far the majority of investment projects are carried out in Europe and North America which are almost equal in terms of frequency of investments. Thirdly, Icelandic firms use horizontal integration strategies and they diversify risk. Irish firms use lateral integration strategies and diversify risk. Finally, MNCs from Israel tend to diversify risk and use horizontal integration strategies.

Keywords: OFDI, MNC, Horizontal integration, Vertical integration, Lateral integration, SMOPEC, Iceland, Ireland, Israel,
Introduction

“Foreign Direct Investment (FDI) is one of the main engines of growth for national economies. In particular, many small and medium sized countries have grown through promoting and attracting FDI. At the same time FDI enables a country to better integrate in an intensive globalized economic environment and face successfully the

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