Oualid Abidi

College of Business Administration, American University of the Middle East

Kuwait

oualid.abidi@aum.edu.kw

Firm-specific determinants of FDI from GCC to MENA countries

Roger Antoun

College of Business Administration, American University of the Middle East

Kuwait

roger.antoun@aum.edu.kw

Houshang Habibniya

College of Business Administration, American University of the Middle East

houshang.habibniya@aum.edu.kw

Vladimir Dzenopoljac

College of Business Administration, American University of the Middle East

Kuwait

vladimir.dzenopoljac@aum.edu.kw

Abstract. The paper analyses the firm-level factors that encourage companies from the Gulf countries to conduct investments in the Middle East and North Africa (MENA) using mergers and acquisitions. Numerous local investors do not seem to be deterred by dissuasive locational variables and ineffective integration in the MENA region. Trade agreements amongst MENA countries, e.g., Arab Maghreb Union, Gulf Cooperation Council (GCC), and the Arab Cooperation Council did not enhance foreign direct investment (FDI) between those nations due to structural gaps and incongruences. Therefore, the aim of this research consists in investigating the extent to which GCC firms' decisions to conduct investments in MENA region are explained by their characteristics (size, age, performance, state ownership, and debt structure). Those factors are assumed to exert an influence on M&A decisions along with other institutional and economic factors. The findings reveal that while firm's size and performance exert a positive effect on a firm's decision to expand within MENA region, state ownership has a negative influence. The study also aligns with the results from more mainstream research on born-global firms, since firm's age has no significant power on internal MENA FDI outflows. This study sheds light on a rather underexplored research area. Future research could examine the impact of other explanatory organizational and country-level variables.

Received: June, 2018

1st Revision: September, 2018

Accepted: November, 2018

DOI: 10.14254/2071-8330.2018/11-4/1

JEL Classification: E22, F21, G34

Keywords: FDI, GCC, MENA, mergers and acquisitions, firm-specific variables, state-owned enterprises