Institutional Reform and FDI Decision in Transition Economies

The article considers the impact of institutional reform on the decision of foreign enterprises and foreign entrepreneurs to directly invest in the transition economy of Syria. It responds to the calls for more open research design that can go beyond the borders of the quantitative findings of previous econometric research by adopting a qualitative research strategy. The results reveal that institutional reforms enhanced Syria’s attractiveness to foreign direct investment. Institutional barriers proved to be less daunting to foreign investors whose backgrounds were culturally similar to that of Syria and/or already had experience in Syria or in a similar type of economy. The impact of background similarity and previous experience in similar contexts appeared to be less important when the foreign investor was a multinational enterprise than for individual entrepreneur. Moreover, these factors also appeared to be less important for large enterprises compared to small enterprises.