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Foreign Direct Investment and the Organization of French Firms

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  • Catherine Laffineur

Abstract

This article examines how foreign direct investment (FDI) affects the work-organization and decentralization of decisions within headquarters. The first part of the paper develops a model of firms organization in an open economy to examine how FDI affects firms workforce composition and worker autonomy. The second part of the paper focuses on empirically testing the predictions of the model by using a unique comprehensive dataset on French manufacturing firms. I use difference-in-difference techniques combined with propensity score matching on multinational firms and show that the number of workers performing supervision activities significantly rises. Creating an original index for workforce autonomy, I also show that it increases after FDI. Thus, FDI is a significant means for fostering both decentralization of decisions and re-organization of activities towards supervisory activities.

Suggested Citation

  • Catherine Laffineur, 2019. "Foreign Direct Investment and the Organization of French Firms," Annals of Economics and Statistics, GENES, issue 135, pages 121-156.
    • Handle: RePEc:adr:anecst:y:2019:i:135:p:121-156
    DOI: 10.15609/annaeconstat2009.135.0121
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    Cited by:

    1. Borrs, Linda & Eppelsheimer, Johann, 2020. "The effects of foreign direct investment on job stability: Upgrades, downgrades, and separations," IAB-Discussion Paper 202024, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Koerner, Konstantin & Borrs, Linda & Eppelsheimer, Johann, 2023. "FDI and onshore job stability: Upgrades, downgrades, and separations in multinationals," European Economic Review, Elsevier, vol. 152(C).

    More about this item

    Keywords

    FDI; Tasks; Inequality; Firm organization.;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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