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Foreign Direct Investments and Domestic Employment of German SMEs: The Moderating Effect of Owner Management

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  • Florian B. Zapkau
  • Christian Schwens
  • Rüdiger Kabst

Abstract

Despite considerable research, the relationship between foreign direct investment (FDI) and domestic employment is still inconclusive. The present paper contributes to extant research by providing differentiated findings on the FDI and domestic employment relationship. We examine how horizontal and vertical FDI impact domestic employment and how the effects are contingent on the ownership structure of the firm. Testing hypotheses on a dataset of 1,079 erman small and medium‐sized enterprises (SMEs) shows that horizontal FDI has a positive influence, whereas vertical FDI has a negative influence on domestic employment. Furthermore, domestic downsizing due to the establishment of foreign production subsidiaries is less severe in owner‐managed SMEs.

Suggested Citation

  • Florian B. Zapkau & Christian Schwens & Rüdiger Kabst, 2014. "Foreign Direct Investments and Domestic Employment of German SMEs: The Moderating Effect of Owner Management," Journal of Small Business Management, Taylor & Francis Journals, vol. 52(3), pages 451-476, July.
    • Handle: RePEc:taf:ujbmxx:v:52:y:2014:i:3:p:451-476
    DOI: 10.1111/jsbm.12044
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