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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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2 Theoretical perspectives


Developing a theoretical framework of what is being studied is a central aspect in case study research.402 The important role of preceding theory development in designing case studies is a main difference compared to other methods in qualitative research, like ethnography or grounded theory.403 As opposed to quantitative research, theory is not used as a pre-defined model of the investigated research object to derive hypoth- eses for testing by large-sample designs.404 Instead, theories help to understand the investigated research object from a conceptual perspective. Furthermore, theoretical perspectives provide starting points for the data analysis in order to explain why iden- tified processes are designed like the way they are. Furthermore, the underlying theo- ries define the theoretical comprehension of the scientist on the topic which is being investigated in the case study.405 For this study, theory is understood in a pragmatic way. For instance, the country-level approaches are rather collections of practical knowledge than scientific theories in their strictest sense.406 In the following sections theoretical concepts are presented that can help to understand the research object on the firm- as well as on the country-level. 2.1 Relevant firm-level theories Investigating or evaluating foreign investment decision processes on the firm-level requires introducing different theoretical perspectives to explain the design of decision processes. Therefore, theoretical perspectives have been selected that provide realistic assumptions and propositions with respect to decision processes in large organizations. In particular the cross-company case analysis in section 4.1.3 requires considering the- oretical perspectives in order to explain company-specific...

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