Multinationals' Productivity Advantage: Scale or Technology
AbstractThe first aim of this paper is to decompose the productivity advantage of foreign multinationals into two components: the technology and scale effect. The second aim is to analyse the causal relationship between foreign ownership and these two components of productivity growth. We do so by analyzing the effects of an acquisition of a domestic establishment by a foreign multinational enterprise, using a combined propensity score matching and difference-in-differences estimation. Our empirical analysis is based on plant level data for the UK. From our econometric investigation four broad patterns emerge: (i) any positive impact of ownership change is predominantly due to change in technical efficiency, not scale effects (ii) the pre-acquisition TFP level of the erstwhile domestic plants play a role - positive or negative - in mediating the rate of technology transfer from the MNE parent companies, (iii) the productivity growth effects are not confined to the year of acquisition, and tend to persist through time.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5841.
Date of creation: Sep 2006
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- Sourafel Girma & Holger Görg, 2007. "Multinationals' Productivity Advantage: Scale Or Technology?," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 350-362, 04.
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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