Business performance management and FDI: key differences between foreign and domestic-owned firms – a case of Slovakia

    Rastislav RAJNOHA Affiliation
    ; Martina MERKOVÁ Affiliation
    ; Ján DOBROVIČ Affiliation
    ; Zoltán RÓZSA Affiliation


The empirical study defines typical investment behaviour of foreign-owned firms against local firms and highlights benefits and any discrepancies of foreign capital. The paper focuses on industrial enterprises in Slovakia mainly from the automotive, engineering and wood-processing industry (N = 164). Results show the significant dependence of foreign ownership and better business performance compared with domestic firms. The performance was expressed through ROE indicator. Enterprises with the foreign participation of property achieve better performance, most typically with ROE above 10% (p-value < 0.05). The better performance, as well as distinctive feature of intangibles and research & development investments, are typically in foreign-owned firms. Intangibles and R&D as crucial investments do not directly cause better business performance in foreign-owned firms, and we discuss the reasons. The research results offer relevant and interesting implications for managers behaviour, also public authorities as well as motives for further investigation of the business performance management and foreign direct investment issues.

Keyword : business economics, business performance management, foreign direct investment, intangibles, foreign-owned firms, R&D investments

How to Cite
RAJNOHA, R., MERKOVÁ, M., DOBROVIČ, J., & RÓZSA, Z. (2018). Business performance management and FDI: key differences between foreign and domestic-owned firms – a case of Slovakia. Journal of Business Economics and Management, 19(1), 42-62.
Apr 30, 2018
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Achim, M. V.; Borlea, S. N.; Mare, C. 2016. Corporate governance and business performance: Evidence for the Romanian economy, Journal of Business Economics and Management 17(3): 458–474.

Barrell, R.; Holland, D. 2000. Foreign direct investment and enterprise restructuring in Central Europe, Economics of Transition 8: 477–504.

Bartelsman, E.; Beetsma, R. 2003. Why pay more? Corporate tax avoidance through transfer pricing in OECD countries, Journal of Public Economics 87(9–10): 2225–2252.

Belás, J.; Gabčová, L. 2016. The relationship among customer satisfaction, loyalty and Financial performance of commercial banks, E+M Ekonomie a Management 19(1): 132–147.

Belás, J.; Sopková, G. 2016. A model of entrepreneurial orientation, Transformation in Business & Economics 15(2B): 630–645.

Bevan, A.; Estrin, S. 2004. The determinants of FDI into European transition economies, Journal of Comparative Economic 32(4): 775–787.

Beyer, J. 2002. “Please invest in our country” – how successful were the tax incentives for foreign investment in transition countries?, Communist and Post-Communist Studies 35(2): 191–211.

Bisbe, J.; Malagueňo, R. 2012. Using strategic performance measurement systems for strategy formulation: Does it work in dynamic environments?, Management Accounting Research 23(4): 296–311.

Breinek, P. 2005. Procesy globalizace ve světové ekonomice, Politická ekonomie 53(6): 826–841.

Buckley, P. J. 2009. Internalisation thinking: From the multinational enterprise to the global factory, International Business Review 18(3): 224–235.

Chidlow, A.; Salciuviene, L.; Young, S. 2009. Regional determinants of inward FDI distribution in Poland, International Business Review 18(2): 119–133.

Czarniewski, S. 2016. Small and medium-sized enterprises in the context of innovation and entrepreneurship in the economy, Polish Journal of Management Studies 13(1): 30–39.

Dehaene, A.; De Vuyst, V.; Ooghe, H. 2001. Corporate performance and board structure in Belgian companies, Long Range Planning 34(3): 383–398.

Dow, D.; Ferenčíková, S. 2010. More than just national cultural distance: Testing new distance scales on FDI in Slovakia, International Business Review 19(1): 46–58.

Dubravská, M.; Mura, L.; Kotulič, R.; Novotný, J. 2015. Internationalization of entrepreneurship – motivating factors: Case study of the Slovak Republic, Acta Polytechnica Hungarica 12(5): 121–133.

Dudáš, T.; Lukáč, M. 2014. Increase in labour productivity in the context of FDI inflows into the automotive industry of Visegrad Group member states, Actual Problems of Economics 162(12): 96–105.

Dunning, J. H. 1993. Trade, location of economic activity and the MNC: A search for an eclectic approach. London: The United Nation Library on Transnational Corporations.

Dunning, J. H. 2000. The eclectic paradigm as an envelope for economic and business theories of MNC activity, International Business Review 9(2): 163–190.

Everitt, B. S. 1977. The analysis of contingency tables. London: Chapman, Hall.

Fabry, N.; Zeghni, S. 2006. How former communist countries of Europe may attract inward foreign direct investment? A matter of institutions, Communist and Post-Communist Studies 39(2): 201–219.

Ferenčíková, S.; Dudáš, T. 2005. The impact of foreign direct investment inflows on the economic growth in the New EU member states from Central and Eastern Europe, Ekonomický časopis/Journal of Economics 53(3): 261–272.

Fifeková, M. 2008. Foreign direct investment and spillover effects [online]. Available from Internet:

Finkelstein, M. O.; Levin, B. 2001. Statistics for lawyers. New York: Springer.

Fisher, S.; Gould, J. A.; Haughton, T. J. 2007. Slovakia’s Neoliberal turn, Europe-Asia Studies 59(3): 977–998.

Gauselmann, A.; Knell, M.; Stephan, J. 2011. What drives FDI in Central-Eastern Europe? Evidence from the IWH-FDI-Micro database, Post-Communist Economies 23(3): 343–357.

Gimbert, X.; Bisbe, J.; Mendoza, X. 2010. The role of performance measurement systems in strategy formulation processes, Long Range Planning 43(4): 477–497.

Giroud, A. 2007. MNC vertical linkages: The experience of Vietnam after Malaysia, International Business Review 16: 159–176.

Horta, I. M.; Kapelko, M.; Lansink, A. O.; Camanho, A. S. 2016. The impact of internationalization and diversification on construction industry performance, International Journal of Strategic Property Management 20(2): 172–183.

Hošková, A. 2001. Impact of foreign direct investment in the economy of Slovakia. National Bank of Slovakia, Bratislava [online]. Available from Internet:

Isobe, T.; Makino, S.; Montgomery, D. 2000. Resource commitment, entry timing, and market performance of foreign direct investments in emerging economies: The case of Japanese international joint ventures in China, Academy of Management Journal 43(3): 468–484.

Jin, Z.; Xia, B.; Li, V.; Li, H.; Skitmore, M. 2015. Measuring the effects of mergers and acquisitions on the economic performance of real estate developers, International Journal of Strategic Property Management 19(4): 358–367.

Kádárová, J.; Durkáčová, M.; Teplická, K.; Kádár, G. 2015. The proposal of an innovative integrated BSC–DEA model, Procedia Economics and Finance 23: 1503–1508.

Kalotay, K. 2002. Central and Eastern Europe: Export platform for investors? The Journal of World Investment 3(6): 1037–1059.

Kalotay, K.; Sulstarová, A. 2010. Modelling Russian outward FDI, Journal of International Management 16(2 Special Issue): 131–142.

Karkinsky, T.; Riedel, N. 2012. Corporate taxation and the choice of patent location within multinational firms, Journal of International Economics 88(1): 176–185.

Kendall, M.; Stuart, A. 1979. The advanced theory of statistics. Vol. 2. New York: Hafner.

Ključnikov, A.; Belás, J.; Kozubíková, L.; Paseková, P. 2016. The entrepreneurial perception of SME business environment quality in the Czech Republic, Journal of Competitiveness 8(1): 66–78.

Knápková, A.; Homolka, L.; Pavelková, D. 2014. Utilization of balanced scorecard and the effect of its use on the financial performance of companies in the Czech Republic, E + M Ekonomie a Management 17(2): 146–160.

Korauš, A.; Štefko, R.; Dobrovič, J. 2015. Acqusition activity in financial sector, in 12th International Scientific Conference on European Financial Systems 2015. Brno: Masarykova univerzita v Brne, 277–286.

Liu, X.; Anbumozhi, V. 2009. Determinant factors of corporate environmental information disclosure: an empirical study of Chinese listed companies, Journal of Cleaner Production 17(6): 593–600.

Merková, M.; Rajnoha, R.; Novák, P. 2012. Quantitative and qualitative diagnostic methods for measuring the effects of foreign direct investment of the wood processing industry in the Slovak Republic, Drewno-Wood 55(187): 65–87.

Morgan, R. E.; Strong, C. A. 2003. Business performance and dimensions of strategic orientation, Journal of Business Research 56(3): 163–176.

Novotný, F. 2008. Daňová optimalizace nadnárodních společností prostřednictvím vnitřních cen: přehled hlavních teoretických východisek a možných makroekonomických dopadů, Politická ekonomie 56(1): 40–53.

Pangarkar, N.; Lim, H. 2003. Performance of foreign direct investment from Singapore, International Business Review 12(5): 601–624.

Panik, M. J. 2005. Advanced statistics from elementary point of view. London: Elsevier Academic Press.

Pavlínek, P. 2002. The role of foreign direct investment in the privatisation and restructuring of the Czech Motor Industry, Post-Communist Economies 14(3): 359–379.

Pavlínek, P.; Smith, A. 1998. Internationalization and embeddedness in East‐Central European transition: The contrasting geographies of inward investment in the Czech and Slovak Republics, Regional Studies 32(7): 619–638.

Pearson, K. 1904. On the theory of contingency and its relation to association and normal correlation. London: Dulau, Company.

Perkmann, M. 2006. Extraregional linkages and the territorial embeddedness of multinational branch plants: Evidence from the South Tyrol Region in Northeast Italy, Economic Geography 82(4): 421–441.

Pim, F.; Llinares, E.; Gonnet, S. 2008. PEs and transfer pricing: The playing field in international taxation redefined, Tax Planning International Transfer Pricing 12(12): 1–6.

Rajnoha, R.; Drábek, J.; Sujová, A.; Merková, M.; Simanová, L.; Volčko, I. 2013. Measurement and management of business performance. Zvolen: Technical University in Zvolen.

Rajnoha, R.; Lesníková, P. 2016. Strategic performance management system and corporate sustainability concept – specific parametres in Slovak Enterprises, Journal of Competitiveness 8(3): 107–124.

Rajnoha, R.; Slivková, D.; Dobrovič, J. 2014. Globalization and transfer pricing in multinational corporations in Slovakia and OECD countries – Analytical study and decision-making model on the choice of optimal transfer-pricing method, Ekonomický časopis/Journal of Economics 62(6): 609–630.

Rajnoha, R.; Štefko, R.; Merková, M.; Dobrovič, J. 2016. Business intelligence as a key information and knowledge tool for strategic business performance. E + M Ekonomie a Management 19(1): 183–203.

Rothaermel, F. T. 2001. Complementary assets, strategic alliances, and the incumbent’s advantage: an empirical study of industry and firm effects in the biopharmaceutical industry, Research policy 30(8): 1235–1251.

Rugraff, E. 2008. Are the FDI policies of the Central European countries efficient? Post-Communist Economies 20(3): 303–316.

Rybář, M. 2011. National determinants of international preferences in post-communist Europe: The case of Slovakia in the European Union, Communist and Post-Communist Studies 44(3): 161–171.

Simmons, R. 2006. Does recent empirical evidence support the existence of international corporate tax competition?, Journal of International Accounting, Auditing and Taxation 15(1): 16–31.

Šoltés, V.; Gavurová, B. 2015. Modification of performance measurement system in the intentions of globalization trends, Polish Journal of Management Studies 11(2): 160–170.

Štefko, R.; Slusarczyk, B.; Kot, S.; Kolmasiak, C. 2012. Transformation on steel products distribution in Poland and Slovakia, Metalurgija 51(1): 133–136.

Tuček, D.; Hájková, M.; Tučková, Z. 2013. Utilization level of Business management in Czech enterprises – objectives and factors, E + M Ekonomie a Management 16(2): 81–98.

UNCTAD. 2013. Global Investment Report 2013. Global value chains: Investment and trade for development. Geneva and New York: United Nations.

Urquía Grande, E. et al. 2011. The impact of Accounting Information Systems (AIS) on performance measures: empirical evidence in Spanish SMEs, The International Journal of Digital Accounting Research 11: 25–43.

Virglerová, Z.; Dobeš, K.; Vojtovič, S. 2016. The perception of the states influence on its business environment in the SMEs from Czech Republic, Administratie si Management Public 14(26): 78–96.

Virglerová, Z.; Homolka, L.; Smrčka, L.; Lazányi, K.; Klieštik, T. 2017. Key determinants of the quality of business environment of SMEs in the Czech Republic, E & M Ekonomie a Management 20(2): 87–100.

Zajac, Š.; Baláž, V. 2007. Dual economy and impacts of foreign investment on private R&D in Slovakia, Ekonomický časopis/Journal of Economics 55(9): 851–872.

Zámečník, R.; Rajnoha, R. 2015. Strategic business performance management on the base of controlling and managerial information support, Procedia Economics and Finance 26: 769–776.

Žižka, M.; Hovorková, V.; Turčok, L. 2016. Performance evaluation of Czech innovative companies: data envelopment analysis approach, International Journal of Strategic Property Management 20(4): 427–438.

Send mail to Author

Send Cancel