Vitalina Puhach

Type of the article: Research Article

Abstract
Ensuring entrepreneurial stability of the business environment constitutes an important objective of public administration, particularly relevant amid global political and economic instability and exposure to external shocks, especially for minimizing the risks of financial distress and preventing corporate bankruptcy. The study aims to assess the relationship between foreign direct investment (FDI) as a percentage of GDP and the level of entrepreneurial stability as a prerequisite for reducing bankruptcy intensity and ensuring the sustainable functioning of enterprises. Correlation and regression analyses are applied for the 2016–2023 data across 15 EU countries selected according to the criterion of data availability. The results reveal the association between FDI (% of GDP) and a composite indicator of entrepreneurial stability, which indirectly reflects the resilience of enterprises to bankruptcy and crisis phenomena. A cross-country differentiation allows for the classification of four groups: countries with a strong negative association (Germany, France, Latvia, Lithuania), a strong positive association (the Netherlands, Romania), a medium level of association (Estonia, Spain, Croatia, Italy, Cyprus), and a weak relationship (Luxembourg, Poland, Portugal, Norway). Using the ARDL model, both short-term and lagged effects between FDI and entrepreneurial stability have been identified, as well as their impact on financial resilience and the reduction of bankruptcy probability over time. The regression models enable the assessment of the impact of FDI on business stability, forecasting bankruptcy risks, and supporting managerial decision-making to stimulate entrepreneurial activity and enhance economic security.