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Mobility Barriers and Profitability of Multinational and Local Enterprises in Indian Manufacturing

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  • Kumar, Nagesh

Abstract

This paper examines the determinants of profit margins of affiliates of multinational enterprises and local firms in forty-three Indian manufacturing industries to seek explanations of the superior performance of the former. The empirical analysis finds support for the proposition that multinational enterprises and local firms constitute different strategic groups in an industry and that the former as a group enjoys greater protection from mobility barriers. Multinational enterprises appear to enjoy persistent advantage over their local counterparts especially in knowledge (both technology and human skill) intensive industries. Residual ability differences are not statistically significant in explaining profitability differences between multinational enterprises and local firms. Copyright 1990 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

Volume (Year): 38 (1990)
Issue (Month): 4 (June)
Pages: 449-63

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Handle: RePEc:bla:jindec:v:38:y:1990:i:4:p:449-63

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Christian Bellak, 2004. "How Domestic and Foreign Firms Differ and Why Does it Matter?," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 483-514, 09.
  2. Uma S. Kambhampati & Paul A. Kattuman, 2003. "Growth Response to Competitive Shocks: Market Structure Dynamics Under Liberalisation - the Case of India," ESRC Centre for Business Research - Working Papers wp263, ESRC Centre for Business Research.
  3. Holger Görg & Aoife Hanley, 2004. "Does Outsourcing Increase Profitability?," The Economic and Social Review, Economic and Social Studies, vol. 35(3), pages 267-288.
  4. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.
  5. B.L. Pandit & N.S. Siddharthan, 2007. "Inter-firm differences in FII portfolio investment in India," Working Papers id:1243, eSocialSciences.
  6. Mishra, Bikash Ranjan, 2011. "Inward FDI and firm-specific advantages of Indian manufacturing industries," MPRA Paper 35119, University Library of Munich, Germany.
  7. Christian Bellak, 2001. "Multinational Enterprises and Their Domestic Counterparts: Past Research, Current Issues and Future Directions," Working Papers geewp18, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  8. Zuniga-Vicente, Jose Angel & de la Fuente-Sabate, Juan Manuel & Suarez Gonzalez, Isabel, 2004. "Dynamics of the strategic group membership-performance linkage in rapidly changing environments," Journal of Business Research, Elsevier, vol. 57(12), pages 1378-1390, December.
  9. Pfaffermayr, Michael & Bellak, Christian, 2000. "Why foreign-owned firms are different : a conceptual framework and empirical evidence for Austria," HWWA Discussion Papers 115, Hamburg Institute of International Economics (HWWA).
  10. Arnab Bhattacharjee & Sumit K. Majumdar, 2011. "How much does industry matter in an emerging market economy?," Dundee Discussion Papers in Economics 256, Economic Studies, University of Dundee.
  11. Kumar, Nagesh, 1996. "Foreign Direct Investments and Technology Transfers in Development: A Perspective on Recent Literature," UNU-INTECH Discussion Paper Series 06, United Nations University - INTECH.
  12. K.S. Sujit & Badshah Mukherjee, 2005. "How Much Does R&D Decision Depend on Firm, Industry, Group and its Interactions?," Industrial Organization 0503008, EconWPA.

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