Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI:Evidence from international Greek investments

During the last two decades Greece has emerged as a key regional player and one of the largest investors in the Central

and Eastern and South-Eastern European Countries (CESEE) [Bastian, J. (2004). Knowing your way in the Balkans: Greek

foreign direct investment in Southeast Europe. Southeast European and Black Sea Studies, 4(3), 458–90; Demos, A.,

Filippaios, F., & Papanastassiou, M. (2004). An event study analysis of outward foreign direct investment: The case of

Greece. International Journal of the Economics of Business, 11(3), 329–48; Kekic, L. (2005). Foreign direct investment in the

Balkans: Recent trends and prospects. Southeast European and Black Sea Studies, 5(2), 171–90]. With the opening up of

neighbouring markets in the early 1990s the Greek firms and entrepreneurs grabbed the opportunity to exploit their

ownership advantages and expand abroad. Within this context, the primary aim of this study is to test the impact of

ownership and location advantages in determining the internalisation decisions by Greek investors participating in the

Athens Stock Exchange (ASE), proving that Dunning’s eclectic paradigm (OLI) is a holistic, yet context specific framework

of analysing foreign direct investment (FDI) determinants. To set the OLI in a specific context, we account for the different

sectors and countries where Greek companies have internationalised, as well as for the time period when investments have

been made. This paper’s second major contribution is that by looking at both ownership advantages and institutional

determinants it complements the previous works on institutional determinants of FDI. Our findings show that the

expansion of Greek firms occurs primarily in similar countries with small market size, and open economies. Rule of law and

high bureaucratic quality remain essential for the firm’s decision whereas the existence of high corruption act as a deterrent.

Finally, a significant finding is that of the existence of a learning curve in the Greek firms’ international expansion.