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Foreign Investments in BRIC Countries

Empirical Evidence from Multinational Corporations


Thomas Poplat

Investments in BRIC countries have been a main driver of the significant increase of cross-border investment activity in recent years. But investments in these emerging economies entail significant risks as institutional voids, host governments and national champions dictate the local business conditions for multinationals. This study investigates decision processes underlying cross-border investments in BRIC countries and discusses their critical success factors. The empirical results show how internal and external forces influence corporate decision-making efficiency. Moreover, the study highlights country-specific challenges for corporations which consider investing in BRIC countries.


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Index of abbreviations


ARR Accounting rate of return BB Betriebs-Berater (journal) BCG Bd. BRIC Boston Consulting Group Band Brazil, Russia, India and China Capex Capital expenditures CAPM Capital asset pricing model CDBA Costs of doing business abroad CEO Chief Executive Officer Cf. Compare for CFO Chief Financial Officer CFROI Cash flow return on investment CIMA Chartered Institute of Management Accounting CINC Composite Index of National Capabilities CMA Comparative management accounting COO Country of origin CPI Corruption Perception Index CSF Critical success factor DAC Development assistance committee DAX Deutscher Aktienindex DCF Discounted cash flow DPC Decision process comprehensiveness DPS Decision process speed EBIT Earnings before interest and taxes E.G. Exempli gratia EMNC Emerging market multinationals EVA Economic value added FDI Foreign direct investment FiCo Finance & Controlling GAINS Gestalt approach of international business strategies GDP Gross domestic product GNI Gross national income HR Human resources XX Index of abbreviations I-proposal Investment proposal IC Investment Committee IMF International Monetary Fund IPC Intellectual property rights IPO Initial Public Offering IRR Internal rate of return IT Information technology KPI Key performance indicators LOF Liability of foreignness LOO Liability of outsidership M&A Mergers and acquisitions MAS Management Accounting Systems MNC Multinational corporations MNE Multinational enterprise MRTP Monopoly and Restrictive Trade Practices Act NPV Net Present Value OECD Organization of Economic Development and Cooperation OPEX Operational expenditures P Page P&L Profit and loss p-proposal project proposal PAC Growth Acceleration Program PESTEL Political, Economic, Social, Technological, Environmental PPP Purchasing power parity QDA Qualitative data analysis R&D Research and...

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