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(Not So) Easy Come, (Still) Easy Go? Footloose Multinationals Revisited

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Listed author(s):
  • Pierre Blanchard
  • Emmanuel Dhyne
  • Catherine Fuss
  • Claude Mathieu

Abstract

This paper revisits the "footloose" nature of multinational firms (MNFs) hypothesis. Using firm-level data for Belgium over the period 1997-2008, we rely on a Probit model and take into account the endogeneity of the determinants of firm exit. Our results may be summarised as follows. First, the unconditional exit probability of MNFs is lower than that of domestic firms. Second, controlling for firm and sector characteristics - firm age, Total Factor Productivity, sunk costs, size, competition on the product market, sector-level value added growth, and sector dummies - the difference between the exit probability of MNFs and domestic firms becomes positive. Third, our results show that MNFs have a lower sensitivity to sunk costs and size than do domestic firms, which may be interpreted as lower exit barriers due to greater possibilities of relocating tangible and intangible assets to foreign affiliates.

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File URL: http://hdl.handle.net/10.1111/twec.12301
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Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 39 (2016)
Issue (Month): 5 (05)
Pages: 679-707

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Handle: RePEc:bla:worlde:v:39:y:2016:i:5:p:679-707
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Find related papers by JEL classification:
  • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
  • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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Cited by:

  1. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  2. E. Dhyne & C. Duprez, 2015. "Has the crisis altered the Belgian economy’s DNA ?," Economic Review, National Bank of Belgium, issue ii, pages 31-43, september.

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