Firm-specific capabilities and foreign direct investment activities of Turkish manufacturing firms An empirical study

Abstract

Purpose - The purpose of this paper is to investigate the capabilities and characteristics of Turkish manufacturing firms that engage in outward FDI activity. To this end, the paper aims to explore how these firms' capabilities vary with the sample characteristics including subsidiary age, size, sector, host country location, ownership pattern and market entry mode. Design/methodology/approach - The data were gathered via cross-sectional survey from a sample 94 Turkish manufacturing firms (TMFs) that have subsidiaries based in 28 different countries. Both univariate and multivariate tests were used to analyze the data. Findings - Findings show that sample firms had strong firm-specific capabilities when they started to expand their business activities through foreign direct investment (FDI). The firm-specific capabilities were grouped into four categories as operation-related, product-related, marketing-related and management-related. While the capabilities of the sample firms varied to a moderate extent with their age and size, and to a limited extent with market entry mode, no significant differences were noted with respect to the industry, host country location and ownership pattern. Research limitation/ implication - Relying on the perceptual assessment of single respondents constitutes the main limitation of this study. There is also a need to collect data from other emerging or developed countries to enable comparisons between Turkey and other countries. Originality/ value - This is one of the few studies which attempt to examine the firm- specific capabilities of FDI firms from an emerging country.