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Going Multinational: What are the Effects on Home-Market Performance?

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  • Robert Jäckle
  • Georg Wamser

Abstract

This paper compares the home-market performance of German multinational enterprises (MNEs) and national firms, both before and after switching from national to multinational activities. Regarding the former case, our results show that future multinationals outperform domestic firms. When assessing the ex post performance of multinationals, selectivity issues must be taken into account. Applying an endogenous treatment model, it turns out that after switching, both productivity and wage growth are higher at newly founded MNEs. While capital intensities increase compared with those of national firms, employment growth rates are negatively related to switching, suggesting that home and foreign employment are substitutes. Copyright 2009 The Authors. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd. 2009.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0475.2009.00472.x
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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 11 (2010)
Issue (Month): (05)
Pages: 188-207

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Handle: RePEc:bla:germec:v:11:y:2010:i::p:188-207

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References

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  1. Michael Pfaffermayr, 1999. "Ownership Advantages, Foreign Production and Productivity: Evidence from Austrian Manufacturing Firms," Review of Industrial Organization, Springer, vol. 15(4), pages 379-396, December.
  2. Giorgio Barba Navaretti & Davide Castellani, 2003. "Investments Abroad and Performance at Home Evidence from Italian Multinationals," Development Working Papers 180, Centro Studi Luca d\'Agliano, University of Milano.
  3. Muendler, Marc-Andreas & Becker, Sascha O., 2006. "Margins of Multinational Labor Substitution," IZA Discussion Papers 2131, Institute for the Study of Labor (IZA).
  4. Koetter, M. & Bos, J.W.B. & Heid, F. & Kolari, J.W. & Kool, C.J.M. & Porath, D., 2007. "Accounting for distress in bank mergers," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 3200-3217, October.
  5. Becker, Sasha O & Ekholm, Karolina & Jackle, Robert & Muendler, Marc-Andreas, 2004. "Location Choices and Employment Decisions: A Comparison of German and Swedish Multinationals," University of California at San Diego, Economics Working Paper Series qt2fq490pd, Department of Economics, UC San Diego.
  6. Marin, Dalia, 2004. "A Nation of Poets and Thinkers - Less so with Eastern Enlargement? Austria and Germany," CEPR Discussion Papers 4358, C.E.P.R. Discussion Papers.
  7. Sascha O. Becker & Robert Jäckle & Marc-Andreas Mündler, 2005. "Kehren deutsche Firmen ihrer Heimat den Rücken? - Ausländische Direktinvestitionen deutscher Unternehmen," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 58(01), pages 23-33, 01.
  8. von Kalckreuth, Ulf, 2005. "A "wreckers theory" of financial distress," Discussion Paper Series 1: Economic Studies 2005,40, Deutsche Bundesbank, Research Centre.
  9. Slacalek, Jirka & Fritsche, Ulrich & Dovern, Jonas & Döpke, Jörg, 2005. "European inflation expectations dynamics," Discussion Paper Series 1: Economic Studies 2005,37, Deutsche Bundesbank, Research Centre.
  10. Sascha O. Becker & Marc-Andreas Muendler, 2006. "The Effect of FDI on Job Separation," CESifo Working Paper Series 1864, CESifo Group Munich.
  11. Campbell, John Y. & Hilscher, Jens & Szilagyi, Jan, 2005. "In search of distress risk," Discussion Paper Series 1: Economic Studies 2005,27, Deutsche Bundesbank, Research Centre.
  12. Falko Fecht & Kevin Huang, 2004. "Financial intermediaries, markets, and growth," Econometric Society 2004 North American Summer Meetings 419, Econometric Society.
  13. Chiara Criscuolo & Ralf Martin, 2009. "Multinationals and U.S. Productivity Leadership: Evidence from Great Britain," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 263-281, May.
  14. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
  15. Arnold, Jens Matthias & Hussinger, Katrin, 2004. "Export Behavior and Firm Productivity in German Manufacturing: A Firm-level Analysis," ZEW Discussion Papers 04-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. Arnold, Jens Matthias & Hussinger, Katrin, 2005. "Exports versus FDI in German Manufacturing: Firm Performance and Participation in International Markets," ZEW Discussion Papers 05-73, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  17. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July.
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Citations

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Cited by:
  1. Muendler, Marc-Andreas, 2006. "Margins of Multinational Labor Substitution," University of California at San Diego, Economics Working Paper Series qt6b2236xm, Department of Economics, UC San Diego.
  2. Sascha O. Becker & Marc-Andreas Muendler, 2006. "The Effect of FDI on Job Separation," CESifo Working Paper Series 1864, CESifo Group Munich.
  3. Dirk Engel & Vivien Procher, 2010. "Home Firm Performance after Foreign Investments and Divestitures," Ruhr Economic Papers 0193, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Becker, Johannes & Riedel, Nadine, 2012. "Cross-border tax effects on affiliate investment—Evidence from European multinationals," European Economic Review, Elsevier, vol. 56(3), pages 436-450.
  5. John P. Weche Geluebcke, 2012. "Foreign and Domestic Takeovers in Germany: Cherry-picking and Lemon-grabbing," Working Paper Series in Economics 240, University of Lüneburg, Institute of Economics.
  6. Joel Stiebale & Michaela Trax, 2011. "The effects of cross-border M&As on the acquirers' domestic performance: firm-level evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 957-990, August.
  7. Michaela Trax, 2011. "Productivity and the Internationalization of Firms – Cross-border Acquisitions versus Greenfield Investments," Ruhr Economic Papers 0259, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  8. Wen-Chung Hsu & Xingbo Gao & Jianhua Zhang & Hsin Mei Lin, 2011. "The effects of outward FDI on home-country productivity: Do location of investment and market orientation matter?," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 4(2), pages 99-116, June.

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