Transformation and foreign direct investment: Observations on path dependency, hybridisation, and model transfer at the enterprise level

Abstract

This article deals with the impact of foreign direct investment (FDI) on transformation processes in Central and Eastern Europe (CEE). Our specific interest is in the effects of FDI on the organisation of work and labour relations at the enterprise level; in a more general sense we are concerned with the contribution of FDI to the creation of the microeconomic foundation essential to functioning market economies. We hold that there is a discernible process of selective harmonisation taking place between outside influences and existing domestic factors. In this context we postulate that the importance of FDI is further enhanced by the fact that it influences a broad array of societal transformation processes beyond the enterprise itself, thus contributing to a process which could develop into what we have labelled a European-style environment. Admittedly, the outcome can as yet only be rudimentarily defined, especially since a European-style environment, as a point of reference, is itself currently undergoing continuous change. But we hypothesise that it will be a process which reflects to varying degrees both the endogenous and exogenous sources of its making.