Introduction: Acquisition Strategies in European Emerging Markets

Abstract

The nations of central and eastern Europe have joined countries in Asia and Latin America as emerging economies. Many countries in the region have transformed their economic systems from socialism to capitalism in fifteen years, starting with the fall of the Berlin wall on 9 November 1989 and culminating, for ten of them, in membership of the European Union (EU) on 1 May 2004. However, these ‘European emerging economies’ (EEE) are unusual among emerging economies due to their entrenched communist legacy, and recent deep and rapid institutional change. Thus, they were not market economies and were essentially closed to international business until 1990. However, by the time of EU membership, they had developed market-oriented institutions, largely private ownership of firms, (almost) free access to international markets, and the shared legal framework of EU member countries. Despite their volatile environments, they had also attracted investors willing to take the risks in the expectation of fast future market growth or reduced production costs. Foreign direct investment (FDI), and acquisitions in particular, have played an important but complex role in the restructuring and upgrading of local firms and industries in these economies (Meyer, 2001b; World Bank, 2004).