Modern Economy, 2011, 2, 717-728
doi:10.4236/me.2011.25080 Published Online November 2011 (http://www.SciRP.org/journal/me)
Copyright © 2011 SciRes. ME
717
The Determinants of Turkish Outward Foreign
Direct Investment
İbrahim Anıl1, Ismail Armutlulu1, Cem Canel2, Rebecca Porterfield2
1Faculty of Business Administration and Economics, Department of Busi ness Ad mi nist ration, Marmara University,
Istanbul, Turkey
2Cameron School of B usiness, University of North Carolina Wilmington, Wilmington, USA
E-mail: porterfieldr@uncw.edu
Received July 12, 2011; revised August 20, 2011; accepted September 29, 2011
Abstract
The general theory of Foreign Direct Investment (FDI) has been built on the experience of developed coun-
tries’ investors. Therefore, there is an extensive amount of literature about firm behaviors in developed
countries. Some researchers have started investigating why, how and when developing countries’ firms en-
gage in outward FDI. All of these studies have shown that the FDI determinants of firms in newly industrial-
ized economies (NIEs) are different from the FDI determinants of firms in developed economies. This study
investigates the entry mode and location choice determinants of Turkish firms’ outward direct investments,
which are operating in Central Asia, Russia and Balkan Countries, over the period of 1989 to 2005. We find
that these investments are associated with high levels of economic and political risks, cultural proximity and
lack of ownership advantages. The main purpose of this study is to provide new evidence for these NIE’s
outward determinants.
Keywords: International Business, Manufacturing, Foreign Direct Investment
1. Introduction
Many individual Turkish entrepreneurs made invest-
ments during the period of 1989-2005 in the Turkic Re-
publics where new market economies emerged following
the dissolution of the Soviet Union. These activities were
regarded as investment opportunities. Although there
have been some studies related specifically to FDI in
some Turkic countries [1] there have been few studies
about the Turkish FDI’s, analyzing why and how those
companies chose outward countries for FDI, their com-
petitors, and their performances in those countries.
The direct foreign capital investments of Turkish firms
most of which emerged as international firms in this re-
gion, reached 4644 billion YTL by 2007. Few interna-
tional competitors entered these markets, due to percep-
tions of the high levels of risk and uncertainties involved.
Turkish firms, however, have maintained their activities
with considerably high performance. This phenomenon
cannot be explained through existing international direct
investment theories or by current studies on global
emerging firms. The involvement of emerging country
firms in direct foreign investment is a wholly original
phenomenon in terms of theories of direct investment.
Therefore, in this study, data from 107 firms and 169
facilities that directly invested in four Turkic Republics,
Bulgaria, Romania and Russia were collected through
surveys and in-depth interviews in order to discover the
determinants of the investment and location decision
making of these firms and the fundamental dynamics of
the global emerging firms.
In order to ensure an accurate comparison with devel-
oped countries’ determinants, the factors affecting the
decision making processes of the survey group were ob-
tained using the same determinants used to identify the
factors within developed countries. Most of the Turkish
firms that went to the Turkic Republics for direct in-
vestment decided to find new markets and to use the
competitive advantage of being the first to enter into the
market. Those firms, which found cheap goods, labor,
and quality resources decided to invest in these markets
only to find appropriate resources whilst totally ignoring
the domestic market. Ironically, some of them wanted to
export those products. This study explains the research
findings and relates them to existing theories. The next
section provides the theoretical framework for this study,
İ. ANIL ET AL.
718
section three presents the research findings and section
four provides conclusions.
2. Theoretical Framework
The majority of the information regarding international
business administration is based upon analysis of the
behavior of firms in developed countries. All the existing
theories of direct investment have been shaped and de-
veloped in order to explain the behaviors of the firms in
developed countries. Bucklet et al., [2] noted that in-
vestment by developing countries in developed or de-
veloping markets has emerged as a recent focus of re-
search, generally applying existing theories. With the
exception of analysis of motivation for FDI in Bulgaria
[1], many of the FDI strategies have focused on industry
specific motivations [3-5].
The direct capital investments of Turkish firms and of
international entrepreneurs display characteristics which
differ from the behavior of companies from other devel-
oping countries. Hymer [6] used the industrial organiza-
tion approach to explain the direct foreign capital in-
vestments to developed, and developing countries. Sev-
eral researchers [7-9] attempted a similar analysis util-
izing the internalization approach which focuses on the
motivation of coordinating interconnected functions for
purposes of cost reduction and knowledge sharing. Dun-
ning [10-12] maintained that the internationalization of
production is such a complex process that it cannot be
explained by a single theory or approach, and as a re-
sponse developed the more comprehensive eclectical
approach created from a synthesis of these two ap-
proaches. Other theories developed during the same pe-
riod include the competitive international industry ap-
proach by Vernon [13,14] studies by Kojima [15] to ex-
plain Japan’s direct investments, and lastly, foreign capi-
tal theories based on firm growth theories by Penrose [16]
and Screiber [17]. Dunning’s eclectical approach, also
referred to as the Ownership, Location and Internaliza-
tion (OLI) approach, maintains a strong position in re-
cent studies [18] According to the OLI approach direct
capital investments have the advantages of ownership,
benefiting from economies of scale, the skills of tech-
nology, patent advantage, brand development and unique
management skills allowing for duplication in other geo-
graphic locations. The advantages of location are the
natural resources of the country, the size of the domestic
market, the low input costs such as energy and labor, and
taxes and subventions. In the internalization set, the ob-
jective is usually to make use of the existing deficient
competitor conditions in these countries. In this frame-
work, two of the three basic motives in Dunning’s ap-
proach were taken as the basis of the analysis of deter-
minants of direct investments. Thus, those investing in
order to seek market or to seek cheap resources (Effi-
ciency Seeking) have been grouped separately and the
differences between them have been explained [10,19].
Global borning firms are the new phenomena in inter-
national business literature. Having been established
without passing through the Uppsala model which re-
sembles Penrose’s company growth theories [20] and
through the phases conceptualized in innovation models
[21] these companies [22] have been internationalized by
reaching the level at which they can sell at least one
quarter of their goods abroad within the first three years
of their existence. The studies that have been conducted
to explain the behavior of the companies in this area [23-
26] aim to specify the dynamics of global born firms.
International born Turkish firms, apart from those, which
are global borning firms, are those whose first foundation
took place abroad without any ownership advantage.
Following the dissolution of the Soviet Union, Turkish
companies were established in the newly-independent
countries as international firms in order to take advan-
tage of the developed countries’ avoidance of these
“risky” emerging economies and thus operate in markets
free of competition. They were established without con-
cern for the level of technological development so as to
benefit from the opportunities presented by the market.
Based on the assumption that they would not face com-
petition for a long period, firms even accepted the risks
of high costs of implementing the contracts. Some of the
Turkish companies operating in developing markets such
as Romania, Turkmenistan, Kazakhstan and Bulgaria
play important roles in those domestic competitive mar-
kets, with billion dollar annual revenues, the developed
technology, the distribution channels and the managerial
skills they possess. Findings about the international
borning Turkish firms are not familiar to scholars study-
ing international investment theories. The emergence
into the global economy of Turkish firms has not been
the focus of attention amongst theorists and thus, cannot
be explained within the framework of generally accepted
theories of direct foreign capital investment.
3. Methodology and Research Findings
3.1 Method
This study focused on identifying the determinants of
Turkish FDI’s in seven countries based on an eques-
tionnaire survey format developed by Tatoglu and Glais-
ter [27]. The questionnaire was given to 107 firms with
wholly owned subsidiaries and 169 facilities in Bulgaria,
Romania, Uzbekistan, Kazakhstan, Turkmenistan, Kyr-
gyzstan and Russia. We personally went to the countries
Copyright © 2011 SciRes. ME
İ. ANIL ET AL.
Copyright © 2011 SciRes. ME
719
and asked the managers who made the investment deci-
sions to fill out the survey forms. With the Foreign Eco-
nomic Relations Board and the country’s commerce
consulates, we formed a sample which is calculated from
the total census by analyzing the businesses with more
than fifty employees. According to our list 20 companies
did not wish to participate in the survey, and we had an
84% response rate. As it can be seen from the total in-
vestment amounts shown in Table 1, the majority of the
companies consist of small-scale businesses. The average
investment amount is 1,704,241 dollars. Table 2 shows
the industrial distribution of our sample. The 107 com-
panies in our sample had operations in 129 different sec-
tors. Some of the companies had more than one factory
in the same sector, which provided us with 169 compa-
nies in our data set.
In this study we used the survey form developed by
Tatoglu and Glaister [28]. Tatoglu and Glaister [29] pro-
vide the details for the development, accuracy and con-
fidence results of the survey form. The survey form en-
abled us to compare the results by developed and devel-
oping countries. In our study we used a survey form con-
sisting of 16 sections besides the beginning section where
company information is presented. Table 3 provides a
summary of each of the sixteen sections.
3.2. Results and Findings
Table 4 addresses the motivations for country choice by
asking “How important were the following factors in
your decision to choose the country as a location for in-
vestment?” For this study a new question; “to have the
advantage of being the first to enter the market” was ad-
ded to the questionnaire form. The survey and results
follow:
Choosing the magnitude of the average as the criterion,
the most important factor in determining the choices of
country is the “Advantage of being the first to enter the
market” with an average score of 4.743. Other important
determinant factors are, “Purchasing power of custom-
ers” (3.718) in second position “Level of competition in
Industry” third (3.717), “Growth rate of the country”
(3.715) fourth, “Size of the Market” fifth (3.463.), “Pos-
sibility of obta ining low cost inpu ts” sixth (3.438), “Easy
access to markets of neighboring countries” seventh
(3.374), and “Return of the Profit to the country of ori-
gin” (3.313), in the eighth position. Market motivation is
consistent with the Bitzenis [30] (2007) findings.
According to the analyses conducted with the second-
dary data (population, national income level, population
size of the Turkish minority, and national income per
capita of the country) it can be seen in Table 5 that there
is no correlation between the level of investment pro-
vided by the Turkish firms and the population, national
income level, population size of the Turkish minority,
and national income per capita of the country. Similar to
the foreign investments by China, Turkish firms invest
more in countries where there are Turkish or Turkic mi-
norities in the framework of cultural similarity. [31] The
study by Buckley et al., [31] provides the data and
analysis related to China.
The Kaiser-Meyer-Olkin measure of sampling adequa-
cy tests whether the partial correlations among variables
are small. Bartlett’s test of sphericity tests whether the
correlation matrix is an identity matrix, which would
indicate that the factor model is inappropriate. The next
item from the output is the Kaiser-Meyer-Olkin (KMO)
and Bartlett’s test. The KMO measures the sampling
adequacy which should be greater than 0.5 for a satisfac-
tory factor analysis to proceed. Looking at Table 5, the
KMO measure is 0.605. From the same table, we can see
that the Bartlett’s test of sphericity is significant. That is,
its associated probability is less than 0.05. In fact, it is
actually 0.000. This means that the correlation matrix is
not an identity matrix.
3.2.1. Distribution of the Determinants in the Seven
Countries
Our analysis showed that 64 of the 107 firms were
Table 1. Countries and companies used in the study.
Countries Number of
Companies
Small size and
Construction Companies
Number of Target
Companies
Number of responding
Companies
Number of non-responding
Companies
Total Exported
Capital (*)
Türkmenistan 25 16 9 6 3 57551.386
Russia 128 105 23 22 1 188990.715
Romania 166 136 30 27 3 151281.240
Uzbekistan 79 60 19 17 2 37765.125
Kyrgyzstan 17 6 11 10 1 24148.093
Kazakhistan 100 85 15 11 4 444157.768
Bulgaria 56 36 20 14 6 69227.331
Total 571 444 127 107 20 973121658
Resource: (*) http.www.hazine.gov.tr (Undersecretariat of Treasury statistics (2005).
İ. ANIL ET AL.
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Table 2. Distribution of the industry sectors used in the
study.
Industry A B C D E F GH I K L M N Total
Total 3 6 25 16 14 3 221 9 7 6 2 15129
A: Auto, transport; B: Electronics and electrical machinery; C: Food/Drink
Manufacturing; D: Textile, apparel and leather; E: Computer and software;
F: Metal, iron and steel; G: Other manufacturing; H-Export-import trading; I:
Tourism, K: Financial services; L: Architecture, construction services; M:
Transport; N: Other services.
our analysis showed that 64 of the 107 firms were “mar-
ket seeking” and 43 were “resource seeking”. Table 6
shows how many firms in each of the countries in-
cluded in our study was “resource seeking” and how
many were “market seeking”. It is interesting to note that
all of the firms investing in Turkmenistan were “resource
seeking” and 21 out of the 22 firms investing in Russia
were “market seeking” and 9 out of the 11 firms invest-
ing in Kazakhstan were also “market seeking”. The num-
ber of “resource seeking” and “market seeking” firms in
the other four countries does not seem to be significantly
different. Table 6 shows the results of the chi-square test
where Turkmenistan and Kyrgyzstan are combined in the
first phase. In the second phase Romania and Kazakhstan
are combined and the hypothesis of Ho: Row and Col-
umns are independent is tested with 5 degrees of freedom
in the first phase and 4 degrees of freedom in the second
phase. In both phases, this hypothesis could not be re-
jected.
Table 3. Summary of the survey form.
SectionQuestions’ coverage
1 Company’s major activity and relations with the other sectors
2 Company’s entry strategy
3 Factors that affect the entry strategy
4 Motivation factors
5 Company’s perceptions of its strengths
6 Performance expectations related to various criteria and their
satisfaction level
7 Overall performance of investments
8 The performance of the company’s investments compared to
home country operations
9 Performance compared to the competitors in the country of
investment
10 Managerial control over the investment
11 Management problems areas and their frequency
12 Similarity of cultures between the host country and company
13 Percentage of the products purchased from the main company
14 Percentage of the products purchased from the investment
company
15 The existence of the relationship with the host country before
the investment and the form of existing relationship
16 The factors and how much they are considered during the in-
vestment period
Table 4. Host country factors for wholly owned subsidiary (WOS) formation. How important were the following factors in
your decision to choose the Country as a location for the WOS or JV? (1 = of no importance, 5 = of major importance).
Question Factor Average
1 Market size 3.463
2 Growth rate of the country’s economy 3.715
3 Political stability in the country 2.654
4 Economic stability in the country 2.673
5 Infrastructure development level in the country 2.654
6 Possibility of obtaining qualified local labor 2.415
7 Foreign investment policy of the government 3.000
8 Possibility of obtaining subventions 2.075
9 Cost of international transportation and communication 2.687
10 Return of profit to the country of origin 3.313
11 Possibility of obtaining qualified inputs 2.396
12 Possibility of obtaining low cost inputs 3.438
13 Tax advantages 3.986
14 Geographical proximity 2.692
15 Level of trade unionism 1.358
16 Purchasing power of customers 3.718
17 Level of competition in industry 3.717
18 Easy access to markets in neighboring countries 3.374
19 Advantage of being the first to enter the market 4.743
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İ. ANIL ET AL.
Table 5. Explanatory factor analysis. (a) Turkish investment amounts and average per capita income, population, the ratio of
the Turkish Minority and the relation between magnitude of the national income.
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.* 0.605
Bartlett’s Test of Sphericity** Approx. Chi-Square 472,612
Df 120
Sig.
a0.000
aBased on correlations; Rotated Component Matrix.
Component
1 2 3 4 5
Economic Stability 0.892 0.046 0.129 –0.029 0.155
Political Stability 0.889 0.059 0.113 –0.095 0.149
Repatriability of Profit 0.414 0.156 –0.055 0.280 –0.239
Access to other markets 0.196 0.839 –0.010 0.189 –0.154
Availability of low cost inputs –0.092 0.734 0.043 –0.040 0.283
Availability of qualified inputs 0.144 0.578 –0.012 0.189 0.468
Market size 0.071 0.045 0.882 –0.125 0.005
Purchasing power of customers –0.084 –0.167 0.790 0.021 –0.072
Growth rate of economy 0.388 0.170 0.590 0.135 –0.053
Degree of unionization 0.180 0.230 0.320 0.147 0.126
Geographical proximity –0.361 –0.011 0.072 0.814 –0.128
International Transport and communication cost 0.108 0.114 –0.061 0.792 0.018
Level of Infrastructure 0.241 0.344 0.164 0.457 0.142
Tax advantages 0.157 0.309 –0.087 0.219 0.729
Level of industry competition –0.200 –0.299 0.304 –0.295
0.494
First enter to the market 0.036 0.032 –0.018 –0.045
0.261
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 8 iterations.
(a)
Population Per capita incomeNational incomeTurkish InvestmentTotal Investment Turkish minority
Population
Pearson Correlation
Sig. (2-tailed)
N
1
7
0.541
0.210
7
0.989**
0.000
7
0.170
0.716
7
–0.203
0.662
7
–0.591
0.217
6
Per Capita income Pearson Correlation
Sig. (2-tailed)
N
0.541
0.210
7
1
7
0.616
0.141
7
0.477
0.279
7
0.595
0.159
7
–0.845*
0.034
6
National income Pearson Correlation
Sig. (2-tailed)
N
0.989**
0.000
7
0.616
0.141
7
1
7
0.206
0.657
7
–0130
0.781
7
–0.645
0.167
6
Turkish Investment Pearson Correlation
Sig. (2-tailed)
N
0.170
0.716
7
0.477
0.279
7
0.206
0.657
7
1
7
0.104
0.825
7
–0.183
0.729
6
Total investment
Pearson Correlation
Sig. (2-tailed)
N
–0.203
0.662
7
0.595
0.159
7
–0130
0.781
7
0.104
0.825
7
1
7
–0.668
0.147
6
Turkish minority Pearson Correlation
Sig. (2-tailed)
N
–0.591
0.217
6
–0.845*
0.034
6
–0.645
0.167
6
–0.183
0.729
6
–0.668
0.147
6
1
6
The data used for the analysis of the secondary data was obtained from the related country’s statistics (World Investment Report, United Nations Statistics and
the Undersecretariat of Treasure Statistics 2005).
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İ. ANIL ET AL.
Copyright © 2011 SciRes. ME
722
Table 6. Firms distribution according to investing reasons.
COUNTRIES Total
Turkmenistan Bulgaria Kýrgyzstan Kazakhstan Romania Uzbekistan Russia
Resource Seeking 6 7 6 2 11 10 1 43
Market Seeking 0 7 4 9 16 7 21 64
Total 6 14 10 11 27 17 22 107
3.2.2. Results of the Factor Analysis Based on the
Identified Criteria
When explanatory factor analysis is applied to the nine-
teen criteria of investment determinants, the results are
distributed under 5 factors as shown in Table 7. The
main reason to apply the factor analysis techniques is 1)
to reduce the number of variables and 2) to detect struc-
ture in the relationships between the variables (to classify
them to the most appropriate category).
The criteria “Possibility of obtaining qualified local
labor” in question 6, “Foreign investment policy of the
government” in question 7, and “Possibility of obtaining
subventions” in question 8 were removed from the dif-
ferentiating list since they were associated with more
than one factor. The first factor consists of criteria that
constitute the risk factor: “Economic stability in the
country” in question 4, “Political stability in the country”
in question 3, “Return of the profit to the country of ori-
gin” in question 10. The second factor consists of criteria
that constitute the resource factor: “Easy access to mar-
kets of neighboring countries” in question 18, “Possibil-
ity of obtaining low cost inputs” in question 12, “Possi-
bility of obtaining qualified inputs” in question 11. The
third factor consists of criteria that constitute the market
factor: “Size of the market” in question 1, “Purchasing
power of the customer” in question 16, “Growth rate of
the country’s economy” in question 2, “Level of trade
unionism” in question 15. The fourth factor consists of
criteria that constitute the logistics factor: “Geographical
proximity” in question 14, “Costs of international trans-
portation and communication” in question 9, “Level of
development of infrastructure in the country” in question
5. The fifth factor consists of the criteria that constitute
the competition factor: “Tax advantages” in question 13,
“Level of competition in industry” in question 17, and
the “Advantage of being the first to enter the market” in
question 19.
3.2.3. Differences between the Groups in Terms of the
Market and Resource Factors
Among the investment motives of the Turkish firms, it is
possible to find two of the three motives that Dunning
Table 7. Rotated component matrix.
Component
1 2 3 4 5
Economic Stability 0.892 0.046 0.129 –0.029 0.155
Political Stability 0.889 0.059 0.113 –0.095 0.149
Repatriability of Profit 0.414 0.156 –0.055 0.280 –0.239
Access to other markets 0.196 0.839 –0.010 0.189 –0.154
Availability of low cost inputs –0.092 0.734 0.043 –0.040 0.283
Availability of qualified inputs 0.144 0.578 –0.012 0.189 0.468
Market size 0.071 0.045 0.882 –0.125 0.005
Purchasing power of customers –0.084 –0.167 0.790 0.021 –0.072
Growth rate of economy 0.388 0.170 0.590 0.135 –0.053
Degree of unionization 0.180 0.230 0.320 0.147 0.126
Geographical proximity –0.361 –0.011 0.072 0.814 –0.128
International Transport and communication cost 0.108 0.114 –0.061 0.792 0.018
Level of Infrastructure 0.241 0.344 0.164 0.457 0.142
Tax advantages 0.157 0.309 –0.087 0.219 0.729
Level of industry competition –0.200 –0.299 0.304 –0.295 0.494
First enter to the market 0.036 0.032 –0.018 –0.045 0.261
E
xtraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. aRotation converged in 8 iterations.
723
İ. ANIL ET AL.
used in his eclectical approach: investing to seek markets
and resources. The two groupings have been used since
the companies in this region do not have the opportunity
to engage in international growth [32] in order to seek
strategic resources and markets.
The firms investing to seek markets were distin-
guished according to factor analysis, from those invest-
ing to seek resources. Their distribution throughout the
countries in the study is presented in Table 6. Although
the size of the market is a determinant in all studies [33]
for a considerable number of the Turkish firms (33%) it
is an unimportant factor in their decisions. The size of
the domestic market for international borning Turkish
firms is seen as an important determinant with a 90%
reliability level as shown in Table 8.
3.2.4. Analysis of the Advantages of Ownership and
Location
For all the countries in the study, the potential motive-
tions were measured based on the results from the fourth
section of the questionnaire by the fields of benefiting
from economies of scale, better resource and capacity
use, qualified and privileged access to inputs, presence in
new markets, opportunity for rapid entry into markets,
investment profitability, harmony with Turkish govern-
ment policy, cost of contracting and implementation,
avoiding the risk of misusing production information,
ensuring sufficient quality control, insufficient legisla-
tion on patent and license rights, inability to make tech-
nology transfers through licensing and patents, and in
agencies and licensing. The “gain presence in new mar-
kets” by a score of 4.79 out of 5, “opportunity for rapid
entry into markets” by a score of 4.25, and “investment
profitability” by a score of 3.97 are the important factors
and the others scoring below an average of 2.5 are the
non-significant factors.
International experience, brand and product image,
practicing level of technology and managerial informa-
tion, experience in markets of the chosen country, quality
of staff improvement program, staff quality and product
differentiation and development skills were measured
(based on the results from the fifth section of the ques-
tionnaire) as the starting advantages (Ownership) of the
firms. It was observed that the founders of the firms,
which were born in the country invested in, had interna-
tional experience by a rate of 2.45/5, practicing level of
technology and managerial information by 2.75/5, and
the quality of staff improvement program by 2.55/5,
whereas they do not possess any of the other starting
advantages. The starting advantages for the firms, which
originated in Turkey, are above the average of 4.5/5, thus,
they fulfill the conditions of traditionally international-
ized firms [6,10,19,34].
No statistically significant difference was found be-
tween the averages except for product differentiation and
development skills, when the starting advantages of
those investing for market and those for export were
compared in terms of Turkish investments. It could be
seen that those investing for the market possess product
differentiation and development skills, whereas those
investing to export their existing products do not possess
a high degree of these skills as presented in Table 9.
When the same comparison is made for the direct in-
vestments by Turkish owned firms, Table 10 shows that
Table 8. The relationship between the birthplace of the firms and the reasons of expatriation.
QUESTION 2d Total
Founded in Turkey Founded Abroad
Resource Seek 0.00 Count 12 31 43
Expected Count 16.5 26.5 43.0
Market Seek 1.00 Count 29 35 64
Expected Count 24.5 39.5 64.0
Total Count 41 66 107
Expected Count 41.0 66.0 107.0
Chi-Square Tests.
Value dfAsymp. Sig. (2-sided)Exact Sig. (2-sided) Exact Sig. (1-sided)
Pearson Chi-Square 3297 1.069
Continuity Correction 2601 1.107
Likelihood Ratio 3360 1.067
Fisher’s Exact Test .104 .053
Linear-by-Linear Association 3266 1.071
N of Valid Cases 107
aComputed only for a 2 × 2 table; b0 cells (.0%) have expected count less than 5. The minimum expected count is 16.48.
Copyright © 2011 SciRes. ME
İ. ANIL ET AL.
724
Table 9. The relationship between the reasons of expatriation and the starting advantages (for all firms).
Levene’s Test for Equality
of Variances t-test for Equality
of Means
F Sig.T dfSig.
(2-tailed)
Mean Differ-
ence
Std. Error
Difference
International experience of
company
Equal variances
assumed 0.033 0.857–1.096 950.276 –0.399 0.3638
Equal variances not
assumed –1.101 77.5010.274 –0.399 0.3621
Trade Mark and Brand Image Equal variances
assumed 0.074 0.786–0.100 950.921 –0.039 0.3889
Equal variances not
assumed –0.100 76.2550.921 –0.039 0.3891
Technological and
managerial know-how
Equal variances
assumed 4.232 0.042–0.402 940.688 –0.137 0.3403
Equal variances not
assumed –0.419 86.4000.676 –0.137 0.3266
Experience of foreign market Equal variances
assumed 0.004 0.950–1.404 950.164 –0.498 0.3550
Equal variances not
assumed –1.396 75.0260.167 –0.498 0.3570
Quality of training programs Equal variances
assumed 0.286 0.594–0.720 940.473 –0.234 0.3253
Equal variances not
assumed –0.717 75.4960.476 –0.234 0.3268
Quality of personnel Equal variances
assumed 1.431 0.235–1.304 920.195 –0.473 0.3625
Equal variances not
assumed –1.285 70.7980.203 –0.473 0.3679
Ability to develop
differentiated
Equal variances
assumed 3.327 0.071–2.898 940.005 –0.967 0.3335
Equal variances not
assumed –2.991 84.2310.004 –0.967 0.3232
there is a significant difference between the averages of
those firms that possess a high degree of technology and
high managerial information practicing level (with p-
value 0.018), experience in foreign country markets
(with p-value 0.015), staff quality (probability of type I
error 0.048) and product differentiation and development
skills (probability of type I error 0.001) went to invest in
those countries for the market. The propensity to make
use of these advantages is observed in the investments of
the Turkish firms which invested to search for markets.
The variables shown in Table 9 are based on the fifth
section of the questionnaire.
3.2.5. Analysis of Findings on Risk Taking
The risk-taking behavior of traditionally international-
ized firms is explained by a correlation with the amount
of expected inputs [33,35]. Buckley et al., [31] verified
that the phenomenon of highly risk-laden direct capital
investments ventured by China is also true for the foreign
investments by Turkish firms. All of the Turkish firms,
except for one operating in Uzbekistan, work at high
performance as measured in the seventh section of the
questionnaire. It is seen that they have made their in-
vestments without considering the risk aspect [36] which
verifies the findings of previous studies. No correlation
has been found between (United Nations Conference on
Trade and Development’s (UNCTAD) data on the total
investment countries receive and the data of the Under-
secreteriat of Treasury of the Turkish Republic. The
same is true for risk factor data and COFACE (Country
Risk Rating) risk index data. The results are shown in
Table 11. Political stability was measured on a 1 - 5
likert scale based on the responses to questions three in
the third section of the questionnaire.
Based on these results, there is no difference in the
importance between those that responded negatively and
positively to the criterion of implementation cost of con-
racts. Those who claimed that it was unimportant ex- t
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İ. ANIL ET AL.
Table 10. The relationship between the reasons of expatriation and the starting advantages (for the firms located in Turkey).
Levene’s Test for Equality
of Variances t-test for Equality
of Means
F Sig.T dfSig.
2-tailed
Mean Dif-
ference
Std.Error Dif-
ference
International experience of
company
Equal variances
assumed 0.203 0.655–1.557 390.127 –0.749 0.4807
Equal variances not
assumed –1.513 19.3930.146 –0.749 0.4947
Trade mark and Brand image Equal variances
assumed 0.907 0.347–1.010 390.319 –0.428 0.4239
Equal variances not
assumed –0.943 17.9460.358 –0.428 0.4538
Technological and managerial
know-how
Equal variances
assumed 0.799 0.377–2.482 380.018 –0.631 0.2542
Equal variances not
assumed –2.189 16.2760.043 –0.631 0.2882
Experience of foreign market Equal variances
assumed 1.577 0.217–2.558 390.015 –1.374 0.5369
Equal variances not
assumed –2.365 17.6000.030 –1.374 0.5809
Quality of training programs Equal variances
assumed 0.766 0.387–0.763 380.450 –0.196 0.2575
Equal variances not
assumed –0.731 19.0660.474 –0.196 0.2686
Quality of personnel Equal variances
assumed 3.336 0.076–2.045 370.048 –0.630 0.3078
Equal variances not
assumed –1.625 13.7610.127 –0.630 0.3875
Ability to develop differenti-
ated products
Equal variances
assumed 4.163 0.048–3.695 380.001 –1.417 0.3834
Equal variances not
assumed –3.187 15.6680.006 –1.417 0.4445
pressed that they accepted the risk in order to achieve the
required outcome, whereas those that regarded it as
highly important said that this factor ensures a non-
ompetitive environment and so this aspect was very c
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726
Table 11. Turkish firms and their relationship with the risk dimension of all investments.
Total InvestmentTurkish Investment Political Stability Confidence Index
Total Investment Pearson Correlation
Sig. (2-tailed)
N
1
7
0.104
0.825
7
–0.577
0.175
7
–0.241
0.603
7
Turkish Investment Pearson Correlation
Sig. (2-tailed)
N
0.104
00.825
7
1
7
0.584
0.169
7
0.143
0.760
7
Political Stability Pearson Correlation
Sig. (2-tailed)
N
–0.577
0.175
7
0.584
0.169
7
1
0.246
0.595
7
Confidant. Index Pearson Correlation
Sig. (2-tailed)
N
–0.241
0.603
7
0.143
0.760
7
0.246
0.595
7
1
7
Total Investment Amounts: UNCTAD, Turkish Investment Amounts: Treasure, Political Stability 3.3 Political Stability Standard and Trust Index: COFACE.
H0: “question 2d and question 48 are independent from each other”. It is rejected at the .05 level of significance.
important in order to sustain the same environment.
None of the Turkish firms surveyed stated that they
invested in order to seek strategic resources, and they
pointed out that the material conditions in the region
were not optimal for investing with such an objective.
Furthermore, it is observed that some of these companies
established in Turkey aim to benefit from the ownership
advantages of OLI when the analyses are conducted on
the basis of different investing strategies.
4. Conclusions
The purpose of this research was to add to the body of
literature in the identification of FDI investments strate-
gies in Turkic countries and to assess the differences
from traditional FDI strategy research in developed ver-
sus less developed countries.
This research studied the highly risk-laden direct in-
vestments of Turkish firms under two sub-groups. Inter-
national borning firms are established and operate on
determinants not explained by existing theories of direct
foreign capital investment. The actions of these compa-
nies are only partially related to location choice factors.
The choice of markets which are not considered from
developed and developing countries due to high cost of
contracts is an exceptional situation peculiar to the seven
countries which are the focus of this current research.
The studies on Foreign Direct Investments examine the
investments from companies and analyze them. In this
study 42 of the companies are established in Turkey,
whereas 65 of them were first established in Turkey
showing that 61% of the companies were first estab-
lished abroad.
There is a dual structure evident in the direct invest-
ments of the Turkish firms in this study. Sixty-four firms
invest in order to be the first to enter the market and to
operate in a non-competitive environment. Those firms
that invested for the market and that possess considerable
starting ownership advantages attach importance to cheap
and qualified inputs as well as to the size of the market
and the purchasing power of the customer. Those com-
panies that invested in order to enter into production in
the investment target countries and to export these goods
to other countries possess less starting ownership advan-
tages as compared to those investing for the market.
Companies setting up production units prefer these coun-
tries because of cheap and quality inputs, low business
taxes and subvention advantages. Attaching no impor-
tance to the domestic market, these firms create a posi-
tive externality in the countries in which they invest by
supporting the development of industry and exports.
This research indicates that strategic motivations for
FDI in Turkic countries are consistent with FDI invest-
ment published on developed and developing countries.
However in all studies no assessment of the historical
origin of the Turkish culture was assessed as to its im-
pact on Turkish investing in Turkics and the correlation
with potential historical cultural implications. This in-
formation may have reduced the perception of risk due to
administrative heritage. A limitation of this study was the
nature of the firms surveyed. Further research should
yield additional factor information based on subsets of
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İ. ANIL ET AL.
the borning firms related to such issues as entrepreneur-
rial behavior and origins, historic cultural influences as
related to risk taking. Due to the rapidly evolving econo-
mies of these countries, relevance to development stages
could constitute longitudinal studies in better under-
standing the factor influencers as countries go through
different stages of development.
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