Factors hinder the foreign entities business operation in Visegrad countries

Abstract

AbstractWhy do foreign firms and domestic firms face different hindering factors in a group of the same structural economies and business environment created by the same macroeconomic variables? This study addresses the essential question of the impact of a sound business environment in attracting or deterring foreign direct investment (FDI). This research utilizes the firm‐level World Enterprises Survey (WES) data and employed the parametric and non‐parametric methodology. The binary logistic regression and decision tree have been used to analyze the business environment. The author examines how macroeconomic factors influence the FDI investment decision. It was found that the two models perform very similarly in terms of predicting the business obstacle. Results of this study show that the trade regulation is the area of concern for a sound business environment that is identified by both methods in this study. Countries with stronger contract enforcement and more efficient international trade regulations create a pleasant business environment to attract more FDI.