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Do Multinationals Transplant their Business Model?

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  • Marin, Dalia
  • Rousova, Linda
  • Verdier, Thierry

Abstract

What determines whether or not multinational firms transplant their mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of a multinational firm about transplanting its business organisation to other countries. We test the theory with original and matched parent and affiliate data on the internal organisation of 660 Austrian and German multinational firms and 2200 of their affiliate firms in Eastern Europe. We find that three factors stand out in promoting the multinational firm’s decision to transplant the business model to the affiliate firm in the host country: a competitive host market, the corporate culture of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organisational transfer by 18.5 percentage points, 37, and 31 percentage points.

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Bibliographic Info

Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 398.

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Date of creation: Apr 2013
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Handle: RePEc:trf:wpaper:398

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Keywords: organisational economics of multinational firms; trade and organisations; the theory of the firm; organisational transfer between countries;

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References

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  1. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2010. "Does Product Market Competition Lead Firms to Decentralize?," Harvard Business School Working Papers 10-052, Harvard Business School.
  2. Marin, Dalia & Verdier, Thierry, 2003. "Globalization and the Empowerment of Talent," CEPR Discussion Papers 4129, C.E.P.R. Discussion Papers.
  3. Lorenzo Caliendo & Esteban Rossi-Hansberg, 2012. "The Impact of Trade on Organization and Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1393-1467.
  4. Nick Bloom & Raffaella Sadun & John Van Reenen, 2007. "Americans do I.T. better: US multinationals and the productivity miracle," LSE Research Online Documents on Economics 4555, London School of Economics and Political Science, LSE Library.
  5. Antràs, Pol & Helpman, Elhanan, 2004. "Global Sourcing," CEPR Discussion Papers 4170, C.E.P.R. Discussion Papers.
  6. Marin, Dalia & Verdier, Thierry, 2006. "Power Inside the Firm and the Market: A General Equilibrium Approach," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 109, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  7. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  8. Alessandra Fogli & Raquel Fernandez, 2005. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," Working Papers 05-07, New York University, Leonard N. Stern School of Business, Department of Economics.
  9. OTTAVIANO, Gianmarco & THISSE, Jacques-François, 1999. "Agglomeration and trade revisited," CORE Discussion Papers 1999041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Guadalupe, Maria & Wulf, Julie, 2009. "The Flattening Firm and Product Market Competition," CEPR Discussion Papers 7253, C.E.P.R. Discussion Papers.
  11. Marin, Dalia & Rousová, Linda, 2012. "The Organization of European Multinationals," CEPR Discussion Papers 8881, C.E.P.R. Discussion Papers.
  12. Dalia Marin, 2013. "The Theory of the Firm Goes Global," CESifo Working Paper Series 4509, CESifo Group Munich.
  13. Lorenzo Caliendo & Ferdinando Monte & Esteban Rossi-Hansberg, 2012. "The Anatomy of French Production Hierarchies," NBER Working Papers 18259, National Bureau of Economic Research, Inc.
  14. Raymond Fisman & Edward Miguel, 2007. "Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 1020-1048, December.
  15. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
  16. Luis Garicano & Esteban Rossi-Hansberg, 2006. "Organization and Inequality in a Knowledge Economy," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1383-1435, November.
  17. repec:hrv:faseco:4784029 is not listed on IDEAS
  18. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
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Cited by:
  1. Bircan, Çağatay, 2011. "Foreign Direct Investment and Wages: Does the Level of Ownership Matter?," Working Papers 618, Research Seminar in International Economics, University of Michigan.

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