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Foreign Acquisition, Plant Survival, and Employment Growth

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Author Info
Bandick, Roger () (Aarhus School of Business)
Görg, Holger () (Kiel Institute for the World Economy)

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Abstract

This paper analyses the effect of foreign acquisition on survival probability and employment growth of target plant using data on Swedish manufacturing plants during the period 1993-2002. An improvement over previous studies is that we take into account firm level heterogeneity by separating the targeted plants into those within Swedish MNEs, Swedish exporting non-MNEs, and purely domestic firms before foreign takeover. The results, controlling for possible endogeneity of the acquisition dummy using an IV and propensity score matching approach suggest that acquisition by foreign owners increases the lifetime of the acquired plants only if the plant was an exporter. The effect differs depending on whether the acquisition is horizontal or vertical. We also find robust positive employment growth effects only for exporters, and only if the takeover is vertical, not horizontal.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4226.

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Length: 2010 pages
Date of creation: Jun 2009
Date of revision:
Publication status: forthcoming in: Canadian Journal of Economics, 2010
Handle: RePEc:iza:izadps:dp4226

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Related research
Keywords: employment growth; plant survival; acquisitions; multinational enterprises;

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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References listed on IDEAS
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    Other versions:
  6. Vella, Francis & Verbeek, Marno, 1999. "Estimating and Interpreting Models with Endogenous Treatment Effects," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 473-78, October.
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  14. Arnold, Jens & Smarzynska Javorcik, Beata, 2005. "Gifted Kids or Pushy Parents? Foreign Acquisitions and Plant Performance in Indonesia," CEPR Discussion Papers 5065, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  15. Girma, Sourafel & Gorg, Holger, 2007. "Evaluating the foreign ownership wage premium using a difference-in-differences matching approach," Journal of International Economics, Elsevier, vol. 72(1), pages 97-112, May. [Downloadable!] (restricted)
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