IDEAS home Printed from https://ideas.repec.org/a/sae/globus/v24y2023i2p281-294.html
   My bibliography  Save this article

Outward Foreign Direct Investment, Restructuring and Performance Upgrading: Firm-level Evidence from Portugal

Author

Listed:
  • Natália Barbosa

Abstract

This article assesses the causal relationship between outward foreign direct investment (FDI) and various sides of firm performance, using micro data from Portuguese manufacturing firms during 2006–2014. To control for the possible endogeneity of outward FDI strategies, propensity score matching is combined with difference-in-difference approach. Our analysis shows that the learning effects for parent firms in Portuguese manufacturing depend on the underlying outward FDI strategy. The findings suggest that outward FDI could contribute to enhance firms’ productivity and their scale of operations. However, those learning effects seem to be mostly visible when firms engage in vertical outward FDI. Further, outward FDI, vertical or horizontal, appears to enhance the integration of Portuguese firms into the global economy through increased export intensity. From a managerial and policy perspective, the findings support the argument that outward FDI can indeed be at root of upgrading performance and firm’s restructuring in a small, open and peripheral economy such as Portugal.

Suggested Citation

  • Natália Barbosa, 2023. "Outward Foreign Direct Investment, Restructuring and Performance Upgrading: Firm-level Evidence from Portugal," Global Business Review, International Management Institute, vol. 24(2), pages 281-294, April.
    • Handle: RePEc:sae:globus:v:24:y:2023:i:2:p:281-294
    DOI: 10.1177/0972150920916035
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0972150920916035
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0972150920916035?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Alexander Hijzen & Sébastien Jean & Thierry Mayer, 2011. "The effects at home of initiating production abroad: evidence from matched French firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 457-483, September.
    2. Grossman, Gene M. & Helpman, Elhanan & Szeidl, Adam, 2006. "Optimal integration strategies for the multinational firm," Journal of International Economics, Elsevier, vol. 70(1), pages 216-238, September.
    3. Matthias Arnold, Jens & Javorcik, Beata S., 2009. "Gifted kids or pushy parents? Foreign direct investment and plant productivity in Indonesia," Journal of International Economics, Elsevier, vol. 79(1), pages 42-53, September.
    4. Cesare Imbriani & Rosanna Pittiglio & Filippo Reganati, 2011. "Outward Foreign Direct Investment and Domestic Performance: the Italian Manufacturing and Services Sectors," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(4), pages 369-381, December.
    5. Castellani, Davide & Mariotti, Ilaria & Piscitello, Lucia, 2008. "The impact of outward investments on parent company's employment and skill composition: Evidence from the Italian case," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 81-94, March.
    6. Debaere, Peter & Lee, Hongshik & Lee, Joonhyung, 2010. "It matters where you go: Outward foreign direct investment and multinational employment growth at home," Journal of Development Economics, Elsevier, vol. 91(2), pages 301-309, March.
    7. Kazunobu Hayakawa & Toshiyuki Matsuura & Kazuyuki Motohashi, 2016. "How Does FDI Affect Productivity at Home?: Evidence from a Plant-Level Analysis," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 403-422, December.
    8. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    9. Antrà s, Pol & Yeaple, Stephen R., 2014. "Multinational Firms and the Structure of International Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 55-130, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Natália Barbosa, 2022. "Outward FDI, restructuring, performance upgrading and resilience: Firm-level evidence from Portugal," GEE Papers 0168, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Sep 2022.
    2. Kazunobu Hayakawa & Toshiyuki Matsuura & Kazuyuki Motohashi, 2016. "How Does FDI Affect Productivity at Home?: Evidence from a Plant-Level Analysis," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 403-422, December.
    3. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Motohashi, Kazuyuki & Obashi, Ayako, 2013. "Two-dimensional analysis of the impact of outward FDI on performance at home: Evidence from Japanese manufacturing firms," Japan and the World Economy, Elsevier, vol. 27(C), pages 25-33.
    4. Altuzarra, Amaia & Bustillo, Ricardo & Rodríguez, Carlos, 2018. "Much ado about nothing: No fear of becoming a multinational," International Business Review, Elsevier, vol. 27(1), pages 56-65.
    5. Koray Aktas & Valeria Gattai, 2021. "Inward FDI, outward FDI, and firm-level performance in India," Working Papers 481, University of Milano-Bicocca, Department of Economics, revised Sep 2021.
    6. Valeria Gattai & Giorgia Sali, 2016. "FDI and heterogeneous performance of European enterprises," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(1), pages 25-65, March.
    7. Alessandro Borin & Michele Mancini, 2016. "Foreign direct investment and firm performance: an empirical analysis of Italian firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 705-732, November.
    8. ITO Keiko & TANAKA Ayumu, 2014. "The Impact of Multinationals' Overseas Expansion on Employment at Suppliers at Home: New evidence from firm-level transaction relationship data for Japan," Discussion papers 14011, Research Institute of Economy, Trade and Industry (RIETI).
    9. Damijan, Jože & Kostevc, Crt & Rojec, Matija, 2014. "Outward FDI and company performance in CEECs," Working Paper Series in Economics and Institutions of Innovation 381, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    10. Li, Linjie & Liu, Xiaming & Yuan, Dong & Yu, Miaojie, 2017. "Does outward FDI generate higher productivity for emerging economy MNEs? – Micro-level evidence from Chinese manufacturing firms," International Business Review, Elsevier, vol. 26(5), pages 839-854.
    11. Békés, Gábor & Hornok, Cecília & Muraközy, Balázs, 2016. "Globalization and the markups of European firms," Kiel Working Papers 2044, Kiel Institute for the World Economy (IfW Kiel).
    12. Valeria Gattai & Piergiovanna Natale & Francesca Rossi, 2022. "Board Diversity and Outward FDI: Evidence from Europe," Working Papers 491, University of Milano-Bicocca, Department of Economics, revised Mar 2022.
    13. Luisa Gagliardi & Simona Iammarino & Andrés Rodríguez-Pose, 2021. "Exposure to OFDI and regional labour markets: evidence for routine and non-routine jobs in Great Britain [Who’s got the aces up his sleeve? Functional specialization of cities and entrepreneurship]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 783-806.
    14. Fabrizio Leone, 2022. "Multinationals, Robots, and the Labor Share," Working Papers ECARES 2022-17, ULB -- Universite Libre de Bruxelles.
    15. NI Bin & KATO Hayato & LIU Yang, 2020. "Does It Matter Where You Invest? The Impact of FDI on Domestic Job Creation and Destruction," Discussion papers 20008, Research Institute of Economy, Trade and Industry (RIETI).
    16. Gattai, Valeria & Natale, Piergiovanna & Rossi, Francesca, 2023. "Board diversity and outward FDI: Evidence from europe," Economic Modelling, Elsevier, vol. 120(C).
    17. Jean-Charles Bricongne & Samuel Delpeuch & Margarita Lopez Forero, 2021. "Productivity Slowdown, Tax Havens and MNEs’ Intangibles: where is measured value creation?," Documents de recherche 21-01, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    18. Jean-Charles Bricongne & Samuel Delpeuch & Margarita Lopez Forero, 2021. "Regional Productivity Slowdown, Tax Havens and MNEs’ Intangibles: where is Measured Value Creation?," Working papers 835, Banque de France.
    19. Naveen Rai & Lena Suchanek & Maria Bernier, 2018. "Does Outward Foreign Investment Matter for Canadian Productivity? Evidence from Greenfield Investments," Staff Working Papers 18-31, Bank of Canada.
    20. Konstantin Koerner & Michael Moritz & Johannes Schäffler, 2022. "Foreign direct investment and onshore employment dynamics: Evidence from German firms with affiliates in the Czech Republic," The World Economy, Wiley Blackwell, vol. 45(6), pages 1773-1829, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:globus:v:24:y:2023:i:2:p:281-294. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.imi.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.