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COST Action IS0905 Emergence of Southern Multinationals and their Impact on Europe

Turkish Companies with Outward Foreign Direct Investment (OFDI) in the EU : An International Business and Marketing View * N. Vardar, N. Uray, R. Nacar , C. Aktan. COST Action IS0905 Emergence of Southern Multinationals and their Impact on Europe COST İstanbul Meeting May 24-25, 2011.

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COST Action IS0905 Emergence of Southern Multinationals and their Impact on Europe

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  1. Turkish Companies with Outward Foreign Direct Investment (OFDI) in the EU :An International Business and Marketing View*N. Vardar, N. Uray, R. Nacar, C. Aktan COST Action IS0905 Emergence of Southern Multinationals and their Impact on Europe COST İstanbul Meeting May 24-25, 2011 • Thisresearch is fundedbytheTurkishScientificandResearchCouncil • since August 2010 as part of COST Action IS0905

  2. Introduction • The world trade started to be influenced by different dynamics: • the increasing influence of EmergingMarketsin the world trade: • Big 10 Emerging Markets • China, India, Indonesia, South Korea, Poland, Turkey, Brazil, Mexico, Argentina and South Africa

  3. The importance of Turkey in the new era of internationalization • Turkey as a developing country, accomplished a major increase in its OFDI to developed countries, especially after 2005.

  4. The importance of Turkey in the new era of internationalization • Turkey’s OFDI • reaching to $1.6 billion in 2009, • held the 45th place in OFDI rankings. • listed 3rd country in the region(the West Asian countries) Newgreenfield projects: • Turkey was 25th country with 153 projects in 2009 (YASED, 2010).

  5. Focus in The Literature • ThemicrolevelstudiesfromInternationalManagementperspective in theliteraturemainlyfocus on • 1. UnderlyingMotives of OFDI • 2. Theimpact of FDI Motives on DOI • 3. The role of Firm capabilities and resources as drives of OFDI • 4. The role of Competitivestrategies in OFDI activities of thecompanies

  6. The Rationale and Motives Behind Outward FDI Deng (2003), uses Dunning’s OLI framework and identifies 5Firm-specific internal motives : • resource seeking, • market seeking, • diversification seeking, • technology seeking and • strategic asset seeking motives

  7. “institution based view”: • home country related factors • host country environment related factors • “resource-based view” • resource seeking and • asset seeking motives • Schüler-Zhou and Schüller(2009) • tangible (technology,machine) • intangible resources (management know-how, R&D capabilities, internationally known brands, brand development ability etc.)

  8. Thefindings of recentstudies on EMNCs: “strategic asset seeking”motives and/or “technology based resource seeking’’ motives • acquiring advance technology • enhancing managerial and marketing skills • accessing know-how • having the reputation for being established in a prestigious market • increasing brand familiarity • acquiring well-known international brands • innovation, design, branding and acquisition of technology SOMEMARKETING STRATEGIES AND ACTIONS ARE HIDDEN MOTIVES

  9. Marketing related factor as a single element within other groupings • trademark and brand image(Kaya and Erden, 2008) • speed of responding to consumer demand as firm characteristics (Kaya and Erden, 2008) • branding as firm characteristics (Eren-Erdogmus et al., 2010) • company’s marketing sophistication within improved organizational performance (Khavul et al., 2010) • reputation and product design within perceptual performance measures (Kaya and Erden, 2007) • taking market orientation as an independent variable while measuring subsidiary performance (Kwon , 2010).

  10. Rationale of the research • Marketing related factors as EMNCs’ OFDI motives were investigated as part of different sub-groupings. • Most common measures used for internationalization range fromcombination of basic ratios such as; Foreign Sales to Total Sales Foreign Assets to Total Assets Share of foreign subsidiaries to total subsidiaries, - mostlyobjective /metricfactorswithsomemethodological difficulties - consideration of subjectivefactors can bringsomebenefitsfor theinterpretation.

  11. Rationale of The Research • Competitivestrategies , managerialandorganizationalcapabilitiesandsources of thecompaniesaremainlyinvestigated as thedrives of OFDI, mostlytaken as antecedentsratherthanconsequencies. Internationalizationthrough FDI influences • theperformance of thecompanies in general , marketing performance in particular in terms of thesedimensions

  12. Rationale of The Research 4. IntheInternational Marketing Literature, themajority of studiesfocus on export as a market entrymodeandanalyse; • Export marketing strategies • Theinteractionbetween marketing strategiesandexportperformance as an an indicator of internationalization Verylimitedstudies on FDI as either an entrymode orindicator of internationalization

  13. Objectives of The Study • Thebasicobjectives of thestudyare; • todeterminethe role of underlying marketing relatedmotives of TurkishMultinationalsinvesting in EU, • toanalyzetheimpact of thesemotives on boththetypes of FDI and DOI in thelight of companyandindustrycharacteristics • toexaminetheaffect of FDI typesand DOI on perceivedcompanyperformance in general, marketing performance in particular

  14. Research Methodology Qualitativestudy (Oct ‘10-Jan ‘11) 1)conducted via 10 in-depth interviews to identifyTurkeyspecific marketing related factors, if any 2) to be conducted with Turkish companies having OFDI into EU countries, analyzing the results with the help of SPSS 3) to interpret the analytical results, to be obtained in Phase 2, if needed. Quantitativestudy (March ‘11 – Nov ’11) Further in-depthinterviews (April ‘12?)

  15. Common Points with the Lit. Similar to othercountryMNCs • finding new markets, • gaining experience in new markets, • having company growth, • introducing new products, • getting a larger market share, • having international brands, • entering new business areas, • having cash flow, • turning extra cash into investments, • diluting the risk, • decreasing freight costs, • accessing low cost resources.

  16. Qualitative Findings – Some Specific Factors • In Relation to “Buying Time” in the Internationalization Process • In Relation to New Product Development • In Relation to the Effects of Manufacturing Country of Origin • In Relation to the Effect of Communication • In Relation to Targeting the Turkish Population in Europe as a Niche Market

  17. Conclusions • Through acquisitions, they had access to tangibleandintangible assets - buying an entire knowledge system under a unified control, [Lau et al., 2010, Deng, 2007)] • The tip of the iceberg:Turkish MNCs investing in Eastern EU forcost cutting concerns • Hidden chunk: “manufacturing country of origin” • Therise of communication’seffectandnichetargets in EU

  18. Turkish Companies with Outward Foreign Direct Investment (OFDI) in the EU :An International Business and Marketing View*N. Vardar, N. Uray, R. Nacar, C. Aktan COST Action IS0905 Emergence of Southern Multinationals and their Impact on Europe COST İstanbul Meeting May 24-25, 2011 • Thisresearch is fundedbytheTurkishScientificandResearchCouncil • since August 2010 as part of COST Action IS0905

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