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The literature on foreign direct investment (FDI) has recently analysed the nature of the firm's entry mode choice in a foreign market, particularly the choice between a joint venture and a wholly owned subsidiary. The paper aims at providing further empirical evidence on the influence of some key variables in explaining it. The theoretical framework relates to the resource-based view of the firm and to the more recent competence-based theory. It focuses on the concept of the firm as a collection of productive resources and assets, built through internal learning processes in the form of evolutionary experimentation. The inability of the firm to build internally all the needed knowledge and competencies forces it to acquire them outside, influencing the growth strategy of the firm. As resources and complementary assets are spread out, the firm has to deal with constraints which become more crucial when the firm enters into unfamiliar markets and areas of activity. In particular, when deciding about the entry mode on foreign markets, the firm has to face transaction costs concerning actors and potential partners and their opportunism, and costs related to the need for acquiring information about new institutional environments and their working. According to this view, the resort to co-operative solutions and joint ventures allows firms to reduce costs and uncertainty related to foreign markets, and rises if technological opportunities, tacit skills and competencies constitute an important source of competitive advantage for the firm. An empirical analysis, with reference to a representative sample of FDI undertaken by Italian firms in mining and manufacturing industries over the period 1986–1993, has been developed in order to test the hypotheses.

The flow of foreign direct investment (FDI) to Central and Eastern Europe (CEE) increased rapidly from the end of the last decade. The upheavals which led to dramatic changes in the social, political and economic environment paved the way to western firms for unique opportunities to expand into new markets with a high potential for development as well as for efficient localisation in terms of cost and access to resources. Nevertheless, empirical literature has mainly focused only on the behaviour of the biggest multinational enterprises and less attention has been paid to the SMEs' contribution. This paper aims to highlight the role of SMEs in exploiting the advantages offered by the recent openness of CEE markets. The empirical analysis refers to the Italian case where SMEs constitute the bulk of the industrial system and some evidence on the strategic motivations leading Italian firms to invest in manufacturing activities in CEE is provided. In particular, it is suggested that strategies underlying FDI are linked to the international experience and other characteristics of the parent firm. The behaviour of 124 Italian parent companies (corresponding to 182 direct investments) in the period 1990–94 is analysed by two econometric models.