On the paradoxes of foreign expansion: the experience of Polish firms.
Authored by Piotr Trąpczyński and Krystian Barłożewski.
Internationalization of companies has been regarded as one of the key avenues of corporate growth. In particular, for firms from countries which joined international markets with some delay, like in the case of Central and Eastern Europe, foreign expansion can be a strategy to close the competitiveness gap to firms from more advanced economies. However, for all firms in general, and for Central Eastern European firms in specific, the relationship between foreign expansion and performance is non-trivial. The results of the two complementary research projects completed in the years 2013-2015 clearly show that Polish companies even with more international experience and more developed foreign business activity do not necessarily register the highest performance.
In the conclusion, business leaders are warned not to be overly euphoric after earning the first successes on foreign markets. The experience gained by previous business contacts and the experience gained in apparently similar markets may discourage companies from the effort necessary to appropriately analyze and recognize the specifics of the new country. This in turn can negatively affect the final success of expansion. Hence, a company needs a clear strategy to enter foreign markets, which will be oriented on the one hand to achieve the necessary flexibility and, on the other hand, to reduce and control the complexity of its foreign operations within manageable confines.
The role of competitive upgrading of Central and Eastern European companies before they can build sustainable international presence is also discussed, which is also a crucial role of economic policy in the region. Specifically, it seems inevitable to search for sources of competitive advantage in technological and managerial resources in the future, which may help to avoid ”being stuck in the middle”.
BSR Policy Briefing 4/2018 is written by Piotr Trąpczyński who is Assistant Professor at the Poznań University of Economics and Business, and Krystian Barłożewski who is Assistant Professor at the Warsaw School of Economics.
Download the BSR Policy Briefing here.
