| Summary: | In 2005, the Syrian government decided to move from a centrally planned economy to a more market-based one. This research explains why the Syrian government has taken this transitional decision and presents the institutional reforms carried out as a result of this decision. Indeed, it was clear that a major goal of these institutional reforms was attracting more FDI inflows into Syria. This is because FDI can play a vital role in driving economic growth. Therefore, this study explores the extent to which institutional reforms have affected FDI inflows into Syria, which has not been undertaken before in the transition economy of Syria. Since the early 1990s, many researchers have explored the locational determinants of FDI in transition economies. However, these studies were quantitative, mainly econometric. This study is different since, in respect of the transition economy of Syria, it explores the locational determinants of FDI following a qualitative research strategy that is based on a strategic management perspective. Within this, the deductive and the inductive research approaches are integrated to create a more open and flexible research design that can go beyond the borders of the quantitative findings of the previous econometric research. Data was collected using semi-structured interviews with thirty key decision makers who were directly involved in making the locational decision of FDI in Syria. The thematic analysis of text, using the template technique, was followed in this study to analyse the conducted interviews. The research’s findings revealed that the Syrian government institutional reforms have enhanced Syria’s attractiveness to FDI. Yet, they also revealed that further steps are needed to overcome the remaining problems in the Syrian institutional investment environment. However, these problems proved to be less daunting to foreign investors who already had experience in Syria or in a similar type economy. The same holds true for investors whose backgrounds were culturally close to that of Syria. Other foreign investors, however, overcame these problems by having a Syrian partner. This study also revealed that institutional factors, although important, were not by themselves sufficient to attract FDI into Syria. Foreign investors also had to have economic motivations to invest in Syria to ensure the profitability and the competitiveness of their FDI projects. In addition, the research also revealed that the economic motivations for FDI in Syria were clearly linked with the institutional reforms taken by the Syrian government. This was because institutional reforms opened the door to FDI, enabling foreign investors to benefit from the economic opportunities now offered by Syria.
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