A large literature in cultural geography, history, and sociology has discussed the different, constantly shifting, and mutually defining constructions of 'Europe,' 'Eastern Europe,' and more recently the 'New Europe,' focusing mostly on examples from the media, politics, and sometimes the arts. However, the literature has done little to analyze the construction of notions of Europe, and the role they play, in the realm of business. This paper begins to explore the connection between cultural understandings of Europe and investment decisions. Specifically, it follows a group of investors from Italy, showing the 'cultural clashes' they encountered in setting up business operations in Slovakia, Romania, and Ukraine. The paper is developed in three steps. First, the relevant cultural and economic geographical literatures are reviewed. Second, the historical progression of Italian investment since the 1990s is discussed in relation to broader economic changes in Italy and the New Europe. Third, investors' changing perceptions of the 'New Europe' are discussed in the framework of the consolidation of Italian investments in the region.
Keywords: cultural geography; economic geography; New Europe; foreign direct investment; cultural economy
'Europe' is variously imagined and contested. In the literature, constructions of Europe as Western, efficient, and advanced are often found in opposition to the 'East' or 'Eastern Europe'--less advanced, violent, but also in the process of becoming like the West (Wolff 1994; Todorova 1997; Neumann 1999). However, the literature has done little to consider the construction of such notions of Europe in the minds of key economic actors.
Business decision making, especially in the realms of foreign direct investment and the internationalization of production, is an important--but unexplored--arena in which the notion of Europe is currently being re-imagined. In the 20 years following the fall of the Berlin Wall some have renamed 'Eastern Europe' as 'New Europe.' The new term is often used to identify the willingness of former Eastern European governments and the public to embrace a new, 'European' and capitalist identity. Economic actors are central in the reconfiguration of Europe: the Copenhagen Criteria establish the "existence of a functioning market economy and the capacity to cope with competitive pressure" as a precondition for European Union (EU) membership (EU no date a). In practice, EU-led market reforms consisted of the adoption of a neoliberal model across the region: low corporate taxes, low state spending and improved law enforcement. As a consequence of those reforms, all countries in the New Europe adopted development models based upon the attraction of foreign direct investment (FDI) (Bandelj 2008).
If neoliberal reforms targeted foreign investors as key agents of change in the New Europe, and 'Eastern Europe' itself is currently being dynamically re-imagined, how do investors' changing perceptions of the 'East' affect business decisions? How is the cumulative activity of investors shaping the various imaginations of Europe? This paper explores how various imaginings of 'Europe' contributed to the 'cultural clashes' encountered in setting up and managing business operations by 'Westerners' in the 'East.' To do so, it follows one specific group of foreign investors--Italian textile and clothing manufacturers, plus some of the Italian banks and business services that support them--in their historical and geographical process of expansion into Slovakia, Romania, and Ukraine.
The paper develops a three-step argument. First, the relevant cultural and economic geographical literatures are reviewed. Second, the historical progression of Italian investment since the 1990s is outlined relative to broader economic changes in Italy and the New Europe. Third, investors' perception of the 'New Europe' is analyzed in the context of a) the consolidation of Italian investments in the region and b) the relation between cultural and institutional change. …