Academic journal article The European Journal of Comparative Economics

From Spectator to Walk-On to Actor: An Exploratory Study of the Internationalisation of Greek Firms since 1989

Academic journal article The European Journal of Comparative Economics

From Spectator to Walk-On to Actor: An Exploratory Study of the Internationalisation of Greek Firms since 1989

Article excerpt

Abstract

The article follows the evolution of the Greek business activities in foreign countries. Based on two unique databases, the article acknowledges the existence of two sub-periods. More particularly, the years up to 1998 are characterized by two central elements, whose importance diminishes during the second period: the overwhelming significance of the Balkans (especially the countries bordering on Greece) and the hesitance of large Greek firms. In the second period, large firms make a dynamic entry, while some of them start behaving as real TNCs. However, the importance of small firms but also of the Balkans is preserved. As anticipated, with the shift of the morphological features of Greek entrepreneurial activity in foreign countries, the impact on the Greek economy also changes.

JEL codes: F23, L23, L24, O52

Keywords: Greece, Delocalization, Outsourcing, FDI

1. Introduction

It has been nearly two decades since the collapse of the state-socialist regimes of Central and Eastern Europe (CEE); a series of events that inadvertently changed not only the countries directly involved, but also the whole Continent. Not surprisingly, the countries bordering with the CEE region were the ones most affected. Among these, Greece holds a rather unique position, as it was the only 'Western' European country bordering exclusively with CEE countries. It was therefore one of the most heavily affected countries in many aspects including, inter alia, immigration, security and foreign trade. One of the areas of spectacular change was the internationalization strategies of Greek firms, which were traditionally extremely inward looking.

The main aim of this paper is to explore the internationalization of Greek firms. Specifically, we focus on the evolution of the phenomenon, mainly through a geographical and sectoral perspective, and, also on the resulting impact on the Greek economy. To do so, we have used a number of unique (although rather disparate) sources regarding the foreign activities of Greek firms, the details of which are provided at the respective sections.

2. A conceptual framework for the analysis of internationalization and development

We strongly believe that in order to gain a richer understanding of why firms delocalize,3 one must adopt a two-level analysis. The first level is that of the firm. To answer the question of why firms delocalize, one has to enter the black box that is the firm (something that very few theories claim to have achieved) or at least observe it. Acknowledging the firms as the main element / actor / node of the economy, then the second level is obviously the system / network / chain containing the firm and at the same time affecting it and being affected by it.

The main approaches in explaining why firms internationalize revolve around three main themes; the firm's ownership advantages, the internalization decision and the role of resources (internal or external to the firm). Hymer (1976) supported that a firm needs to possess certain competitive advantages that can compensate for the disadvantages of 'foreignness', which are first created in the home market of the firm, and may subsequently turn out to be more profitable to be exploited abroad.

These advantages (which can take a large number of forms, from material flows - labour, capital, and natural resources - to intangible flows that concern technology, information, entrepreneurial and organizational capabilities) are a classical case of necessary but not sufficient conditions for delocalization. Specifically, possession of such advantages can only interpret a firm's competitive advantage vis-à-vis its competitors at home or abroad. Whether these will be exploited by the firm itself or leased to some foreign firm is an issue discussed by the internalization theory (Casson, 1991).

The same is true for the firm's resources, which constitute the main building block of the many variants of the resource-based theory pioneered by Edith Penrose (1959), in an effort to analyze the growth of firms. …

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