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Blessing or Curse? Domestic Plants' Survival and Employment Prospects After Foreign Acquisition

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Author Info
Girma, Sourafel
Görg, Holger

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Abstract

This Paper investigates whether the acquisition of a domestic establishment by a foreign owner has any effects, positive or negative, on the survival prospects and employment growth of that plant. The empirical analysis uses data from the Annual Respondents Database (ARD) for the UK electronics industry for the period 1980 to 1993. Estimating a standard hazard model including a dummy variable for the incidence of acquisition yields the result that foreign take-over reduces the lifetime of the acquired plant. Estimations of the determinants of employment growth in domestic plants provide some evidence that the incidence of take-over reduces employment growth, in particular for unskilled labour. Both survival and employment growth estimations do not appear to be subject to endogeneity problems.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2994.

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Date of creation: Oct 2001
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Handle: RePEc:cpr:ceprdp:2994

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Related research
Keywords: acquisitions; employment growth; foreign direct investment; survival;

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Find related papers by JEL classification:
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
  3. Ravenscraft, David J & Scherer, F M, 1987. "Life after Takeover," Journal of Industrial Economics, Blackwell Publishing, vol. 36(2), pages 147-56, December. [Downloadable!] (restricted)
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  14. Agarwal, Rajshree & Audretsch, David B, 2001. "Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival," Journal of Industrial Economics, Blackwell Publishing, vol. 49(1), pages 21-43, March. [Downloadable!] (restricted)
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  18. Görg, Holger & Strobl, Eric, 2002. "'Footloose' Multinationals?," CEPR Discussion Papers 3402, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  20. Conyon, Martin J. & Girma, Sourafel & Thompson, Steve & Wright, Peter W., 2001. "Do hostile mergers destroy jobs?," Journal of Economic Behavior & Organization, Elsevier, vol. 45(4), pages 427-440, August. [Downloadable!] (restricted)
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  24. Girma, Sourafel & Wakelin, Katharine, 2001. "Regional Underdevelopment: Is FDI the Solution? A Semiparametric Analysis," CEPR Discussion Papers 2995, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Almeida, Rita, 2003. "The Effects of Foreign Owned Firms on the Labor Market," IZA Discussion Papers 785, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Lucia Piscitello & Larissa Rabbiosi, 2005. "The impact of inward FDI on local companies' labour productivity: evidence from the Italian case," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 12(1), pages 35-51, February. [Downloadable!] (restricted)
  3. Lehto, Eero & Böckerman, Petri, 2006. "Enemy of Labour? Analysing the Employment Effects of Mergers and Acquisitions," MPRA Paper 1812, University Library of Munich, Germany. [Downloadable!]
  4. Rita Almeida, 2004. "The labor market effects of foreign-owned firms," Policy Research Working Paper Series 3300, The World Bank. [Downloadable!]
    Other versions:
  5. Erol Taymaz & Şule Özler, 2007. "Foreign Ownership, Competition, and Survival Dynamics," Review of Industrial Organization, Springer, vol. 31(1), pages 23-42, August. [Downloadable!] (restricted)
  6. Bandick, Roger & Karpaty, Patrick, 2007. "Foregin Acquisition and Employment Effects in Swedish Manufacturing," Working Papers 2007:10, Örebro University, Swedish Business School. [Downloadable!]
    Other versions:
  7. Sule Ozler & Erol Taymaz, 2004. "Does foreign ownership matter for survival and growth? Dynamics of competition and foreign direct investment," ERC Working Papers 0406, ERC - Economic Research Center, Middle East Technical University, revised Mar 2004. [Downloadable!]
  8. Christian Bellak, 2004. "How Domestic and Foreign Firms Differ and Why Does It Matter?," Department of Economics Working Papers wuwp087, Vienna University of Economics and B.A., Department of Economics. [Downloadable!]
    Other versions:
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