Market-Seeking Motives and Market-Related Promises and Actions in Foreign Direct Investment Privatization in Central and Eastern Europe

Abstract

ABSTRACT The process of privatization through foreign direct investment (FDI) in Central and Eastern Europe (CEE) has been organized around interactions of three legally entitled parties, i.e., foreign investor, host government, and host company. The triadic nature of those interactions is addressed in studying the relationship initiation and development. The FDI privatization relationships and the attempts of the three parties to satisfy their objectives have become critical for the survival and successful development of the privatized entity post-privatization. This paper adopts the analytical concept of the interface between motives, promises and actions in the process of relationship development focusing on the role of market seeking motives and market-related promises and actions in the FDI privatization process. Seven cases from Bulgaria are used to unveil the relative significance of the analyzed interface. When assessing FDI investments in CEE foreign investors should assess not only the macro- and microenvironmental conditions, but also pay particular attention to what parties want to gain and what they say they would bring to the venture. The complementarity, compatibility and congruity of motives, promises and actions are suggested to be essential in the successful development of FDI privatization relationships.