ABSTRACT
In the conventional literature, foreign direct investment (FDI) is an 'engine of growth' which unproblematically brings benefits to host economies (Lipton and Sachs, 1990). For the lagging and peripheral economies of Central and Eastern Europe (CEE), these benefits relate to the upgrading of products and processes, the transfer of technological and managerial expertise and the stimulus for competition (Dobosiewicz, 1992; Dunning 1993). However, studies on the embeddedness of firms in CEE (Grabber, 1993; Grabber and Stark, 1997), and research into the transfer of managerial practices across national boundaries (Coller and Marginson, 1998; Elger and Smith, 1994; Marginson et al 1995; Smith and Elger, 1997), suggest that such processes and outcomes are likely to be much more complex as firms enter new markets, acquire new assets and operate in new institutional set-ups. While other literatures on the impact of firms and localities have primarily focused on the direct economic impacts of FDI on employment, supply chains and technology, institutionalist approaches have gone beyond conventional measures of embeddedness and emphasized the way in which economies are shaped by enduring collective forces (Hodgson, 1988). This approach accords great importance to habits, routines and norms, whereby economic agents are the products of past behaviours and learning as well as current incentives.
