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Internationalization from a Small Domestic Base: An Empirical Analysis of Foreign Direct Investments of Icelandic Firms

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Abstract and Key Results

  • Iceland is like a black hole in the study of FDI from the Nordic countries; there is a gap in the literature about FDI from Iceland. This paper is the first empirical study that addresses the outward foreign direct investment of Icelandic firms. The purpose is to demonstrate how Icelandic companies have invested abroad through foreign direct investments.

  • The overall objective of this paper is to describe the key characteristics of Icelandic multinational corporations (MNCs) and to gain a deeper understanding of the internationalization processes of firms with a small domestic base.

  • Many Icelandic companies have been investing heavily abroad over the last six years. Some have acquired companies that are relatively larger than themselves, at least in terms of the number of employees. The main motive for this increase in foreign direct investments is access to a new market. The Icelandic market is simply not large enough for companies to be categorized as medium or large companies in the global environment. What also supports this is that, as mentioned above, the outflow of FDI from Iceland was very low in the last century.

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Notes

  1. Source: Central Bank of Iceland, 17 July 2006. The used exchange rate of the euro/ISK is 94.1.

  2. The term “leapfrogging” describes the rapid change made by a company to a higher level of development without going through the intermediate stages observed in other cases.

  3. Employee numbers include both parent companies and their subsidiaries.

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  1. Faculty of Business Administration, Bifröst University, Borgarnes, Iceland

    Ásta Dís Óladóttir

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Óladóttir, Á. Internationalization from a Small Domestic Base: An Empirical Analysis of Foreign Direct Investments of Icelandic Firms. MANAGE. INT. REV. 49, 61–80 (2009). https://doi.org/10.1007/s11575-008-0125-6

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  • DOI: https://doi.org/10.1007/s11575-008-0125-6

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