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Title:FDI by early movers, followers and latecomers: timing of entry by German firms during transition in the Czech Republic PDF Logo
Authors:Mühlen, Henning
Nunnenkamp, Peter
Issue Date:2009
Series/Report no.:Kiel working paper 1571
Abstract:Theoretical considerations suggest that the option of waiting under conditions of uncertainty affects the relative importance of firm-level productivity and distance-related transaction costs as driving forces of FDI. Yet the timing of FDI has received little attention in the empirical literature on FDI determinants. To help close this gap we analyze FDI decisions by German firms with and without affiliates in the Czech Republic at different stages of transition. We find that FDI entry strongly depends on firm productivity immediately after the political and economic regime change, but less so with diminishing uncertainty. Likewise, distance-related transaction costs discourage FDI by latecomers considerably less than FDI by early movers.
Subjects:Multinational enterprises
firm-level productivity
distance
timing of FDI
JEL:F23
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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