Research of multinational companies operating in serbia

The current research has been realized by uniting of the theoretical cognition through the alteration of the literature relevant for the being, operations ad growing of transnational companies and different spillover effects they create, every bit good as practical research realized in the field on five transnational companies runing in Serbia.

The first portion of the literature reappraisal concentrated on assorted theoretical attacks concentrating on the being, growing and concern activities of transnational companies, among which the focal point remains on the Dunning`s eclectic paradigm and its relevancy to the transnational operations.

At this point, the writer would wish to remember the eclectic paradigm formulated by Tormenting. Dunning ( 1977, 1981, 1988, 1993a, 1995a, 1995b ) and his eclectic paradigm effort to explicate the ability and willingness of companies to function markets across national boundary lines. The eclectic paradigm tends to explicate why companies choose to work any available advantages through foreign production alternatively of utilizing domestic production, exports or portfolio resource flows. Furthermore, Dunning hypothesized that a company will travel for international production or prosecute in foreign direct investing in the instance it owns net ownership advantages ( largely in the signifier of intangible assets ) vis-a-vis houses of other nationalities in functioning peculiar markets, and that these ownership advantages, accompanied by internalisation and location possibilities, will enable a company to profit when utilizing or “ internalizing ” a peculiar foreign market itself, alternatively of selling, leasing or renting them to foreign companies ( OLI advantages ) .

Location possibility in the context of Dunning`s paradigm means turn uping a transnational house ‘s production activity in a foreign state that possesses competitory advantages in footings of factor gifts. Harmonizing to Dunning, if these three conditions ( ownership, location and internalisation ) are non present, the house can alternatively function its local market through domestic production and spread out it to function foreign markets through international trade. The bigger the ownership advantages of transnational companies, the more inducement they have to utilize these themselves. The more the economic sciences of production and selling favour a foreign location, the more they are likely to prosecute in foreign direct investing. The leaning of a peculiar state to prosecute in international production is so dependant of the extent to which its endeavors possess these advantages and the location attractive forces of its gifts compared with those offered by other states ( Tormenting 1981:79 ) .

Tormenting refers to his paradigm as “ the dominant paradigm of international production ” . The eclectic paradigm presumes ownership specific advantages as endogenous variables, i.e. to be a determiner of foreign production. This means that the paradigm is non merely involved with replying the inquiry of why houses go for FDI, in penchant to other manners of cross-border minutess. It is besides concerned with why these houses possess alone resources and competences – relation to their rivals or other nationalities – and why they choose to utilize at least some of these advantages together with portfolio of foreign-based immobile assets. This makes it different from the internalisation theoretical account, which regards ownership advantages as exogenic variables ( Dunning, 1993a:252 ) .

As perceived by Dunning, the eclectic paradigm is meant to capture all attacks to the survey of international production. In his sentiment the theoretical account represents a good starting point to detect the planetary account of MNE`s being and growing since it synthesizes the accounts of the being and nature of international production. Modern economic accounts of cross-border production activities of transnational houses are largely reflected in the constellation of ownership, internalisation and location advantages. Dunning has incorporated those three fractions under the wing of his eclectic paradigm, but his primary aim in making so is still to happen eclectic accounts to the phenomenon of international production.

Furthermore, Tormenting provinces that his eclectic paradigm can give an equal analytical model which provides comprehension for all sorts of foreign production in services. Stressing the mutuality between services and goods industries, he asserts that “ it makes no sense to seek to develop a new paradigm to explicate the “ transnationality ” of the service sector ” ( Tormenting 1993a:248-284 ) . In his scholarly research, Dunning was self-asserting to happen all possible accounts of the being of transnational endeavor in his eclectic paradigm. As the old ages went by, he tried to spread out cognition in the model of his eclectic paradigm by trying to suit possible extra accounts to transnational production activity that come to his cognition.

As an illustration, for case, he points out that the coming of collaborative confederations among transnational houses does non take to the development of a new transnational theory. Therefore, he has incorporated confederation capitalist economy in his eclectic theoretical account. In his renewed version of the eclectic paradigm in the visible radiation of confederation capitalist economy, Dunning ( 1995a ) provinces that inter-firm confederations ( with clear mention to American transnational companies! ) in innovation-led production systems, are looking as dominant signifiers of market-based capitalist economy, and are catching the planetary influence over hierarchal capitalist economy. At this point, the writer would wish to indicate out that Tormenting has focused on the narrow position of the value-adding activity of innovation-led capitalist economy, and has considered other joint ventures as insignificant. However, other writers point out to the fact that all signifiers of bing confederation capitalist economy, non entirely owned production operations, dominate the transnational endeavor engagement in less developed states ( Vaupel and Curhan 1973 ) .

Both in theory or in pattern, internalising a foreign market and traveling for a joint venture confederation with a foreign spouse are merely two possible options that a transnational company can take in international concern activities. Therefore, confederation as a scheme can be the dependent variable, merely like international production, that needs farther accounts. Explanations to joint ventures overseas could besides include ownership, location and internalisation considerations. Border lines between the three degrees of economic analysis – microeconomic, mesoeconomic and macroeconomic – have to be neglected in order to synthesise the assorted economic attacks to the research of multinationals.

This current research showed that transnational theories and paradigms which have been described in the literature reappraisal chapter and which include extended single and group researches are, at best, still in the underdeveloped stage. It could be concluded that non one of these theories, including the Dunning`s eclectic paradigm of international production, has captured the true nature of transnational companies, every bit good as their being, growing and operations. Contemporary theories on transnational companies, elaborated in item by a figure of bookmans, are by and large meaningful for the concern operations of transnational companies in Western Europe, North America and some other parts of the universe. Furthermore, as discussed in the literature reappraisal, the advantages of strategic confederation capitalist economy have been recognized in the literature on international concern late. On the other manus, it is apparent that some bookmans take it for granted and back up the place that it does non necessitate the development of the new transnational theory. For illustration, Dunning ( 1993,1995a ) has tried to include confederation capitalist economy into his eclectic paradigm of international production. He has attempted to incorporate all major transnational theories and he has insisted on doing foreign production as the dependant variable. In fact, Dunning has realized that the phenomenon of confederation capitalist economy is now catching the planetary impact over hierarchal capitalist economy. However, he has minimized the range of confederation capitalist economy merely to American – sponsored inter – company strategic confederations in invention – led production systems. His inclination to comprehend other signifiers of joint – ventures as less important, contradicts the nature and range of international operations in the development states. How can so one explain the turning tendency of and laterality of transnational joint ventures in developing states?

Asides from the joint venture, international trade represents another section which is non clearly captured by modern-day theories on transnational companies. Harmonizing to the theoretical organic structure, companies opt for international production following the standards of ownership – specific advantages, location – specific advantages and internalisation inducements, followed by imperfectnesss of the markets. It could be noticed that a common place of the bulk of international concern bookmans exist that market imperfectnesss, for illustration duties and barriers, prevent efficient operations of international trade, and accordingly the operations of transnational companies. To be more precise, internalisation theory presumes that transnational companies appear due to the market failures which present an obstruction for efficient activities of international trade. However, when a company becomes transnational by holding, for illustration, two or more phases of production procedures located in at least two states, this does non intend that international trade and other manners of concern activities have vanished. Furthermore, one time a company internalizes a market by puting up, for case, a entirely owned subordinate in a foreign state, transactional imperfectnesss still remain present, although at a lower degree than before the internalisation. There is no quandary that external dealing imperfectnesss are present for every bit long as the internal market has to interact with the external unfastened market system, holding in head the links of its supply concatenation to the client ends. Therefore, every bit long as transnational companies interact with external markets, due to their demand to provide markets with their merchandises and services, international trade will be and turn. In add-on, it is non a surprise that transnational companies represent a important portion of international trade volume and growing, harmonizing to the studies of the United Nations. Even in utmost state of affairs of the to the full incorporate perpendicular companies, these companies have to interact with regular, external markets non merely for the intent of marketing their merchandises, but besides for the marketing their surplus of natural stuffs and intermediates.

It should be highlighted that when a company has connotation of spread outing its concern activities to other foreign states, a figure of considerations will be taken into history, asides from ownership – specific advantages, location – specific advantages and internalisation inducements. For case, a inquiry which arises is whether the authorities of the targeted host state supports the puting up of fabrication subdivisions without any national equity. In the instance of Serbia, foreign investors are shown important support if there is an active local engagement. Furthermore, transnational companies may non make up one’s mind to put up a entirely owned fabrication subordinate, in malice of the support of the authorities. It could go on that investing footings, ordinances and conditions are detering for transnational companies. When market imperfectnesss represent an obstruction for the efficient manner of export ( due to merchandise barriers or duties ) , transnational company can take another signifier of available mode which is in conformity with its strategic aims and involvements. Consequently, an MNE can make up one’s mind to put up a to the full owned subordinate in instance its aim is to hold complete ownership, independence and determination – devising. In instances this is non allowed by the host state, another option for a transnational company is to come in into a joint venture understanding with a local company, which would besides intend a divided ownership construction, every bit good as control. However, both of these options represent a portion of cross – boundary line units and signifier and added value to a transnational system. By and large talking, all other possibilities are to be explored by a transnational company before foreign investor makes the determination about the mode of entry to the market of the foreign state. The chosen mode is supposed to maximise the transnational value concatenation. The basic difference between entirely owned subordinates and joint ventures is in the ownership, control and determination devising procedure.

Significant portion of the current research has been dedicated to the spillover effects which transnational companies produce, and their confirmation through the analyzed instance surveies. Harmonizing to the revised literature, the local companies benefit from the transportation of cognition from MNEs, merely in the instance when they have adequately trained human capital. This statement has been explained by the theoretical construct of absorbent capacity – mentioning to the fact that a local house has the ability to acknowledge new cognition, understand it, incorporate it into the house and utilize it fruitfully ( Cohen and Levinthal 1990, Zahra and George, 2002 ) . The grade of spillover effects, really much depends of the host state, in the first topographic point of the local companies and their soaking up power. It is indispensable that the spread between foreign direct investors and local endeavors is non excessively big, otherwise, spillover effects can be neglected. Workforce of the state is the issue which is important for the soaking up power. As the labour market becomes more flexible and work force more educated the inclination towards greater soaking up power additions. Data elaborated in Chapter 4 of this thesis show that Serbia has the highest English speech production proficiency in Eastern Europe. Furthermore, 42 % of the entire population has basic cognition in English, followed by German and Gallic linguistic communication. Serbia offers a broad handiness of extremely qualified staff. The figure of applied scientists and directors is sufficient to run into the turning demand of international companies in the state. Labor supply is comprised of approximately 1.9 million employed and 750,000 unemployed, while increasing by app. 27,000 university and 2-year college alumnuss and 75,000 high school alumnuss annually. Besides, the conducted research on the four multinational companies showed that, for illustration in the instance of Hypo Group that 78 % of the employees belong to the age class of 20 – 39 old ages old, and that 47 % of all employees have university instruction. Additionally, the current research determined that the Serbian work force is rather loyal to the employer and switching occupations is much less frequent than in some Eastern European states. Therefore, the present research is in conformity with the above stated claim revised in the literature, since it was determined that labour force in Serbia is non a inexpensive resource. The thing which was important for the incursion of FDI to Serbia is the flexibleness of its labour force and its ability to larn rapidly. Consequently, the soaking up capacity elaborated in the literature exists in the instance of Serbia and hence, spillover effects can non be neglected.

When it comes to the issue on the perpendicular spillovers, the revised literature provinces that they do non trust on outwardnesss but are a portion of consumer and manufacturer excess by market minutess. Foreign companies frequently purchase intermediate goods from domestic providers, which can make spillovers through several mechanisms ( Lall 1978, Smarzynska, 2002 ) : MNEs can better autochthonal local companies by puting higher concern criterions for them, based on their supply relationship, for illustration they introduce merely in clip bringings, and they provide inducements to better productiveness procedures and the quality of merchandises. At the same clip, FDI can positively impact the demand for intermediate goods, which helps local companies achieve economic system of graduated table. The consequences of the analyzed instance surveies in this research comply with the above stated holding in head that this analysis determined that all of the analyzed transnational companies have really strong perpendicular downward connexions with the local endeavors. For illustration, Telenor realizes building works through local providers in a modern manner to which these endeavors are non used to. Besides, the company purchases package from the local package plan providers, intending that local endeavors are hired to make the package constituents, which are specific for the Serbian market. In the instance of the Hypo Bank, long-run dealingss with local package providers have been developed for the creative activity of specific banking package. When it comes to perpendicular upward dealingss, Holcim and Kraft Foods have engaged local hauling companies for conveyance and distribution of their merchandises. The procedure of lading merchandises is wholly regulated harmonizing to the criterions of these companies and every transporter is required to buy GPS system which enables Holcim and Kraft to hold an penetration to where the merchandises are located in every minute. Besides, for the distribution and retail sale of Telenor`s merchandises, the company hired local endeavors. These local companies have been trained by the Telenor staff in the field of processs which are standardized on the corporate degree. In this manner, new corporate criterion improved the consequence of local distributers.

During the present research close attending was dedicated to entry schemes of the analyzed transnational companies and their strategic aims which motivate them in Serbia. Subsidiaries play many different functions within MNEs and differ in their interactions with the local environment and the spillovers they create. On the other manus, the literature on MNEs impact to the host state has paid small attending to the diverseness of concern schemes that influence the type and extent of spillovers. Therefore, international concern literature on entry schemes ( Anderson and Gatignon, 1986 ; Hennart and Park, 1993 ; Estrin and Meyer, 2004 ) and subordinate functions ( Galunic and Eisenhardt, 1996 ; Birkinshaw, 2000 ) provided the theoretical cognition and the chance to analyse links between FDI schemes and their possible impact in Serbia. Furthermore, the literature on the states in passage ( Djankov, and Murrel, 2002, Estrin, 2002 ) , offered a comprehensive attack of the denationalization construct in Serbia, corroborating that in the instance of Serbia, every bit good as in the states of Central and Eastern Europe foreign ownership has improved productiveness and profitableness of these states in the first old ages after the denationalization. Writers in favour of the procedure argue that investors foreign investors are frequently good positioned to assist and reconstitute a house in crisis, which can, in the short term, mean the loss of work topographic points for a figure of employees, but alternate may be even more drastic, intending that foreign investors are really salvaging occupations by supplying important resources and with this, guaranting the endurance of the company. This point has been confirmed through the instance survey on Holcim Srbija a.d. cement mill, which at the clip of the return over had 2500 employees. Through a carefully deigned denationalization plan, which included attractive redundancy bundles for employees who volunteered to go forth volitionally, this figure was accordingly reduced 470 employees. In this manner, a competitory market oriented company, with a realistic figure of work topographic points was created and continued to carry on its concern activities with success.

Harmonizing to the analyzed literature, policymakers frequently prefer export-orientated FDI undertakings, which are expected to reassign cognition on operating production and to heighten the trade balance by selling to the foreign markets. But some export treating operations in enclaves with few linkages to the local economic system ( Meyer, 2004 ) . Other FDI supply local markets with new merchandise and services, with or without local processing. This type of FDI transfer operational and selling cognition and contribute to the local economic system by supplying better quality merchandises. This besides impacts local competition, while export orientated does non. Both types of FDI potentially reassign resources that may take to spillovers but their nature differs significantly. It has been acknowledged through the analyzed instance surveies that Serbia has more market oriented FDI than efficiency oriented FDI, with merely one efficiency oriented FDI ( Ball Packaging ) . Majority of the FDI in Serbia are market oriented and autumn under the non – exchangeable goods sector. However, these investings are improbably of import for the intent of bettering the overall concern clime in Serbia: the telecommunications sector ( Telenor, VIP ) , investings in banking, insurance and retail. They non merely increase fight, but they besides create a environing which can so go attractive for other efficiency oriented FDI, which is important for the economic stableness of the state.

One of the major concerns in the revised literature on transnational companies is the labour criterions in MNEs affiliates and subcontractors in emerging economic systems. The literature treats this issue from two sides: on one manus, concern with planetary standardisation and the house ‘s repute induces many MNE affiliates to pay higher rewards and to use high labour criterions with regard to working hours, ill leave, child labour, unionization etc. ( Caves, 1996:228, Moran, 2002 ) . By and large talking, MNEs want to maintain their qualified staff and therefore they offer inducements to maintain them satisfied, unless when they are using unskilled labour with few outside occupation chances. On the other manus, lower rewards and lower labour criterions represent chances to cut down production costs. This type of concern is present in certain industries like fabric, footwear and assembly of electronics. ( Cerny, 1994 ; Scherer and Smid, 2000 ) . Apart from houses ‘ battle in activities related to the well-being of their work force, a instead new phenomenon is corporate societal battle via companies ‘ engagement in private and/or public-private administration strategies at the national and multinational degrees ( Falkner 2003 ; Mattli 2003 ; Gulbrandsen 2004 ) . Corporate Codes of Conduct ( CoCs ) , represent a set of regulations many MNEs have adopted in countries runing from labour patterns to environmental criterions. Some CoCs have been developed by single MNEs that try to implement them non merely across their planetary web of subordinates but besides along their concatenation of providers. In the instance of the present research, the analyzed instance surveies showed that transnational companies in Serbia have implemented higher labour criterions refering on the job hours and conditions, together with the execution of their codifications of behavior. Telenor, Holcim, Hypo Group and Kraft Foods have implemented their codifications of behavior non merely on their ain companies in Serbia, but have besides passed these set of regulations to their providers and subcontractors.

It should besides be mentioned that foreign investors influence institutional development, but at the same clip they adjust to local establishments. The literature analyses these issues individually. Writers who belong to the group of scheme bookmans like Peng, Henisz and Meyer analyze how FDI schemes are adjusted to the local contexts and establishments in peculiar, whereas development bookmans investigate how FDI influence local context. It is obvious that FDI schemes and the local environment are interdependent in emerging economic systems. Governments altering ordinances in order to pull FDI can act upon both informal and formal establishments. However, institutional model influences the pick of MNE`s entry scheme to host part.

Furthermore, harmonizing to Meyer, establishments moderate many of the relationships discussed above between foreign and local houses ( Meyer, 2004 ) :

Labor market establishments moderate the mobility of people between local and FDI houses, and therefore the diffusion of cognition, but besides local houses ‘ loss of employees to foreign rivals. Labor Torahs and their enforcement regulate lower limit rewards and working conditions.

Capital market establishments moderate the easiness of local sourcing of capital, but besides the possible herding out of local investing.

Environmental ordinance and enforcement influence the possible negative effects on the local environment.

Competition and industry ordinance influence foreign investors ‘ ability to pull out

monopoly rents or otherwise profit from market power.

Education systems enhance the handiness of skilled labor and the absorbent capacity

Particular economic zones may pull more FDI, but at the same clip they limit the interaction with autochthonal industry and therefore spillovers.

Furthermore, a good apprehension of the function of MNEs in a peculiar state is important for discoursing policy in relation to MNEs. If appraisal exists that the impact of MNEs is positive, an statement could be made for policy intercession to promote FDI ( Blomstrom and Kokko, 2003 ) . However, the present research discovered an of import determination of the sing the host state: it is non possible to accurately mensurate the spillover effects and so show them in the currency sum, because methodological obstructions are merely excessively big. Therefore, it should be recommended that states should non subsidise FDI. Some will happen justification for such subsidisations in the fact that investors can non allow the spillover effects that create, and hence compensation should be made to them. Such compensation in non executable without precise measuring, non to advert the possible injury it could do, one time private involvements master the state. These dangers are rather of import mentioning to the province policies associating to the greenfield FDI in Serbia.

One of the decisions which was drawn from this research is that transnational companies may hold assorted manners of their cross – boundary line activities other than international production. Therefore, placing transnational companies with international production, as seen in the literature, is non meaningful for the scene of their operations in Serbia. As it has been seen in the instance surveies, transnational companies in Serbia operate through different modes of international production, strategic confederations, licencing and many more.

This research, as its part to knowledge, has identified nucleus and subsidiary functions of transnational companies. Furthermore, their subsidiary functions have been analyzed in item during this research, which refers to their transportation of the managerial, proficient and selling accomplishments, research and development activities, employment, industrial and economic growing, human resource development, consumer public assistance, environment protection, cultural apprehension and saving. Furthermore, it is expected that transnational companies which possess apprehension of the Serbian civilization are expected to hold a competitory advantage in the Serbian market in comparing to companies that do n’t.

Majority of research on FDI in the past decennary that have analyzed the net appraisal “ of the impact of FDI in some 30 states over the past 15 old ages, adopted the “ evident positive influence on the economic public assistance the host state ” . Similarly, the macroeconomic research of the states has by and large acknowledged the being of the positive impact of FDI. The challenge which remains for the host state to accomplish is to make the environment competitory plenty to pull the best investors, therefore increasing the economic growing, employment, and export possibilities of the state to the upper limit.

Another utile decision of the research is that peaceable and stabile environment is important for the operations of transnational companies, in order for them to accomplish and keep their concern aims. Therefore, political and economic reforms which have been conducted in Serbia after 2000 and are still in advancement have been rated positively, as perceived by the transnational directors.

The findings of this doctorial research point to the high reactivity of the interviewed transnational directors for the cultural facet of the Serbian population. Namely, this perceptual experience is really much in conformity with the analyzed literature, which emphasizes the demand of transnational companies to understand the civilization of the environing where they conduct their concern operations, in order to accomplish and keep competitory advantage. Furthermore, the respondents by and large viewed Serbian linguistic communication as really of import for the concern activities of transnational companies in Serbia. Therefore, transnational companies runing in Serbia are expected to use adequate figure of Serbian employees and Serbian speech production staff, in order to carry on their day-to-day concern activities without any jobs.

Additionally, decision which could be drawn from this research is that analyzed transnational companies, asides from their apprehension for cultural issues of their staff, besides include them in the procedure of strategic planning and long – term determination – devising. Multinational companies which want to run successfully in the market demand to esteem the local commercial ordinances, along with cultural and ethical considerations, in order to avoid jobs with the authorities and citizens of the host state. This research showed that all of the analyzed companies operate successfully and this fact is positively related to their local reactivity and cultural consciousness. This is really of import for the long – term success of transnational companies in Serbia.

7.2. Bias and restrictions of the instance survey attack

Having in head that the methodological analysis of this doctorial research lays upon the instance studz methodological analysis, some restrictions of this method should be pointed out. For illustration, the writers who deal with this type of research, such as Yin ( 1984 ) , Tellis, Stake and Simons identified three different types of statements against the instance survey research.

First, instance surveies are frequently criticized to hold the deficiency of asperity. Yin ( 1984:21 ) provinces that “ excessively many times, the instance survey research worker has been sloppy, and has allowed ambiguous grounds or biased positions to act upon the way of the findings and decisions ” .

Second, since the instance surveies involve a little figure of analyzed topics, in some instances even merely one topic, they offer really small footing for scientific generalisation, . The inquiry which is frequently raised is “ How can you generalise from a individual instance? ” ( Yin, 1984:21 ) .

Third, non seldom, instance surveies are marked as being excessively long, hard to manage and bring forth and necessitate a monolithic sum of certification ( Yin, 1984 ) . This is peculiarly the instance when it comes to instance surveies of ethnographic or longitudinal nature, which could pull out a great trade of informations over a period of clip. In instance the informations are non organized in a proper mode and consistently, it could do jobs for the research worker.

The usual unfavorable judgment of the instance survey method is its dependence on a individual instance geographic expedition doing it hard to make a generalizing decision ( Tellis, 1997 ) . Yin ( 1993 ) found instance methodological analysis “ microscopic ” because of the limited sampling instances. To Hamel et Al. ( 1993 ) and Yin ( 1994 ) , nevertheless, puting of research parametric quantities and aims are far more of import in instance survey method than a large sample size.

It could be concluded that despite the above stated restrictions, research workers continue to utilize this type of methodological analysis, particularly in the research works where existent – life state of affairss govern societal issues and jobs. Besides, it should be emphasized that instance surveies are really present in the literature in assorted subjects and spheres.

In the instance of the present research, the writer based the analysis on transnational companies runing in Serbia, in different economic system sectors. Furthermore, following the recommendation of Stake ( 1995 ) that clip is limited and that instances that are chosen should be willing to collaborate with the research worker, the research was limited to five instance surveies, which match this description. It should be noted that 30 transnational companies in Serbia were contacted by the writer and that merely five of them responded positively and offered to collaborate through enabling the entree to assorted beginnings of information, which have been relevant for the research procedure. Therefore, it seems necessary to indicate out to the detected restrictions encountered in all of the five analyzed instance surveies:

The decisions in the analyzed instance surveies can merely be applied to the specific industry to which the analyzed company belongs.

The job of questioning transnational directors was obvious throughout the research. Therefore, the decisions reached in the instance surveies can non be treated as general decisions on transnational companies` operations, but merely as company specific decisions. Other transnational companies which have non been included in this research and which operate in different Fieldss of activities may take to different decisions.

The limited figure of directors interviewed by the writer. In the instance of the present research, the writer managed to schedule assignments with the limited figure of directors ( representatives of the top direction and middle direction ) . This state of affairs occurred due to the fact that the official place of the analyzed companies was to let the interviews with the limited figure of directors, which would non upset the day-to-day concern activities of the company.

Some information requested by the writer sing exact Numberss mentioning to companies` concern activities were considered confidential by the interviewed directors and the writer could merely reexamine them in the installations of the company.

7.3. Recommendations related to the function of transnational companies and foreign investing in Serbia

As the concluding consequence of this doctorial thesis, several recommendations and suggestions could be given, which are based on the consequences of the scientific – research procedure which was conducted exhaustively and professionally, and are relevant for the presence, activity and the effects of transnational companies and investings in Serbia and its economic system.

Namely, this phenomenon is of a newer day of the month and, hence, is non explored in a sufficient mode, and peculiarly, non objectively analyzed. When we insist on the objectiveness, a fact which should be taken into consideration is that there are still certain sectors of the Serbian society and political constructions, which are opposed to the enhanced internationalisation of its economic system. In this sense, the writer would wish to give the undermentioned recommendations and suggestions:

Having in head the potencies of Serbia, such as its geo – strategic place and size of the market, transnational directors should see set uping regional central office of their companies in Serbia ( likewise to the regional theoretical account which Kraft Foods Beograd implemented for its East – Adriatic market ) . In this manner, transnational companies could profit from the strategic advantages of the Serbian market through the trading understandings and privileged entree to the markets of Russia ( Serbia is the lone South European and Balkan state holding Free Trade Agreement with Russia ) and the EU.

The turning globalisation of concern is easy heading towards the creative activity of the construct of the planetary community, in which there will be a lower limit of barriers for trading, cross – boundary line activities, confederation capitalist economy and the mobility of production factors. From this state of affairs, legion concern chances appear for transnational companies, which are followed by international challenges. These refer to the differences in economic, political, societal, cultural and spiritual conditions. Therefore, in order for the transnational company to keep its place and competitory advantage, its directors and staff should concentrate on larning specificities of the host state ‘s civilization through cross – cultural preparations from its reliable beginnings. In Serbia, foreign investors can reach SIEPA -Agency for Foreign Investments and Promotion of Export of the Republic of Serbia, Serbian Chamber of Commerce and other regional Chamberss of commercialism, whose services are available at no cost.

It is apparent that bulk of the transnational houses tend to maintain the cardinal direction places for their compatriots. If these companies genuinely want to get the better of cross – boundary line challenges, the procedure of enrolling staff has to be fair in order to supply equal opportunities for the qualified host state citizens, at all degrees of the company. Including qualified Serbian staff in the procedure of decision-making and scheme – planning of Serbian orientated undertakings, would be good for all parties, including multinationals, every bit good as Serbian consumers at big, holding in head that the key of the successful concern is to fulfill the demands of the consumers.

Serbian concern people who wish to come in into joint ventures with transnational companies need to be cautious and to negociate just footings when come ining into these types of understandings. The usual facets that should usually be negotiated refer to the needed engineering, net income and loss distribution, ownership distribution, monetary values of natural stuffs and merchandises and other relevant issues. Serbian companies should look for the ownership – specific advantages with possible foreign spouses. These can include merchandise inventions, merchandise direction, funding capableness, engineering, planetary scanning capablenesss and many more. The mentioned transnational advantages should be used every bit much as possible in a joint venture, in order to do it profitable and successful in the long tally. Besides, Serbian companies should be given to necessitate the transnational companies to prosecute themselves in the research and development activities in a joint venture or within a national company, mentioning to human resource, capital, engineering, etc. Finally, the conditions under which this should be done should be fair in the sense of assisting a existent engineering transportation to the host state.

There should be a crystalline concern relationship between Serbian and transnational companies in order to accomplish long – term success of their concern operations in a joint – venture. Namely, there should be transparence in the information flow within the two parties and earnestness in carry throughing the footings and conditions which have been agreed by the joint – venture understanding, which will assist construct a solid and permanent partnership of the foreign and Serbian party. In this manner, some countries of concern could be avoided, such as misgiving that may look from the side of the local spouse in the instance of failure of staff instruction from the side of the transnational company, which has antecedently been defined by the commissariats of the understanding, for illustration. Therefore, transparence in communicating is important.

Passage states and Serbia in peculiar, need to understand that transnational companies have played critical function in the economic development of many developed states. However, due to nonsubjective fortunes, states in passage are really mach delayed in the sense of research and development in comparing to developed states. This state of affairs appeared due to the inability of those in power to prioritise scientific development, research and advanced engineering direction. If states in passage, including Serbia want to be less-dependant of the research and development plans of transnational companies, they need to prosecute all of their available resources ( human, fiscal and physical ) and set up universe – category engineering institutes and centres of R & A ; D. Following this construct, Serbian universities may spouse with the taking transnational companies runing in Serbia and set about R & A ; D activities in some portion. This could convey double positive consequence for all parties involved: on one side, transnational companies will hold entree to immature and gifted persons whom they could use upon the completion of their surveies to work as experts and advisers ( extremely qualified staff ) , and on the other manus, the universities involved could optimise the usage of their scientists, faculty members, industrialists for research and engineering promotion and participate in up – to – day of the month engineering undertakings and spread out their bing cognition with new planetary engineering tendencies.

Many non – Serbian persons and establishments, mentioning besides to the transnational companies, have been exposed to the fabricated propaganda and misinformation about Serbia and its people. Direct consequence of this state of affairs was the bad image about Serbia, developed peculiarly from the beginning of 1990s, which created a kind of bias about Serbia and its citizens. There is no quandary that many Serbians are to fault for this state of affairs. In order to derive the trust of the international community and investors and to unclutter all misconceptions about the state, it is extremely necessary for the Serbian economic system to be integrated in the regional, international and planetary flows and to honour its concern committednesss and contracts. Therefore, Serbian embassies in different states could play a important function in this section, peculiarly in the sense of interrupting the stereotype and pulling foreign direct investings. The function of the so called “ economic diplomats ” becomes improbably of import as a portion of the long – term scheme of Serbia to involvement transnational companies to put in Serbia and do concern with its companies.

Serbian embassies could besides escalate their attempts in spread outing cognition about Serbia and its civilization through assorted talks, seminars, workshops and the distribution of propaganda stuff about Serbia to strategic locations where non – Serbians go.

7.4. Further research issues

One of the future countries could be the farther research on the cultural facet of this survey on a comparative footing, utilizing other regional states in passage like Croatia, Macedonia, etc. ) . This will assist generalise decisions that transnational companies which possess better understanding for the civilization are perceived to hold a important competitory advantage in the market.

An interesting country of research would be to analyze more closely the indexs of success of transnational companies which conduct their concern activities in Serbia and other states in passage. One of the important aims is to farther research into the correlativity between different positive facets of cultural reactivity and their influence on the concern of transnational companies.

Corporate societal battle could besides be one of the countries of future research. For illustration, much of the bing literature on corporate societal activities has been concerned with the effectivity of such enterprises in turn toing societal and environmental jobs. The treatments largely target the inquiry whether or non MNEs should be active in this country, while the inquiry why MNEs engage in societal plans and which factors determine their pick of scheme could assist direct this argument towards the inquiry of whether and under what conditions they could convey societal alteration.

Finally, future research will be more meaningful if it covers the wide and diverse concatenation of transnational concern operations, including the noticeable growing of inter – company amalgamations, acquisitions and cross – boundary line confederations. It would be really disputing to analyse and compare the advantages of confederation capitalist economy in the first topographic point ( amalgamations and acquisitions ) and hierarchal capitalist economy ( international production ) . The future research on transnational companies will go more interesting as the new signifiers of cross – boundary line activities emerge in the approaching old ages.