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Foreign acquisition, plant survival, and employment growth

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  • Roger Bandick
  • Holger Görg

Abstract

This paper analyzes the effect of foreign acquisition on survival and employment growth of targets using data on Swedish manufacturing plants. We separate targeted plants into those within Swedish MNEs, Swedish exporting non-MNEs, and purely domestic firms. The results, controlling for possible endogeneity of acquisition using IV and propensity score matching approaches suggest that acquisition by foreign owners increases the lifetime of the acquired plants only if the plant was an exporter. The effect is robust to controlling for domestic acquisitions and differs between horizontal and vertical acquisitions. We find robust positive employment growth effects only for exporters and only if the takeover is vertical.

Suggested Citation

  • Roger Bandick & Holger Görg, 2010. "Foreign acquisition, plant survival, and employment growth," Canadian Journal of Economics, Canadian Economics Association, vol. 43(2), pages 547-573, May.
    • Handle: RePEc:cje:issued:v:43:y:2010:i:2:p:547-573
    DOI: 10.1111/j.1540-5982.2010.01583.x
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    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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