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Outward FDI, performance and group affiliation: evidence from French matched firms

Author

Listed:
  • Alexandre Gazaniol

    (Université Paris-Dauphine, LEDa, F-75016 Paris, France ; IRD, UMR225-DIAL, F-75010, Paris, France)

  • Frédéric Peltrault

    (Université Paris-Dauphine, LEDa, F-75016 Paris, France ; IRD, UMR225-DIAL, F-75010, Paris, France)

Abstract

This paper investigates whether group affiliation and stakeholder's nationality affect both the propensity of engaging in outward FDI and its effects on home performance. Using a sample of French manufacturers, we combine propensity-score matching with a Difference-In-Difference estimator in order to estimate the impact of outward FDI on home activities, and distinguish our results for three subsamples: independent firms, firms which belong to a French business group and foreign-owned affiliates. We find that firms which are part of a French business group are more likely to engage in outward FDI and to enjoy positive effects from their investment decision than independent firms. This suggests that independent firms face more obstacles in their internationalization process and that group affiliation might increase the ability of handling international development. Reversely, foreign-owned firms appear less likely to engage in outward FDI and do not enjoy any significant effect on their home performance ex-post. One explanation for this result might be that foreign-owned firms do not invest abroad in order to increase their own performance, but the performance of their own group.

Suggested Citation

  • Alexandre Gazaniol & Frédéric Peltrault, 2013. "Outward FDI, performance and group affiliation: evidence from French matched firms," Economics Bulletin, AccessEcon, vol. 33(2), pages 891-904.
    • Handle: RePEc:ebl:ecbull:eb-12-00468
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    References listed on IDEAS

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    1. Giorgio Barba Navaretti & Davide Castellani & Anne-Célia Disdier, 2010. "How does investing in cheap labour countries affect performance at home? Firm-level evidence from France and Italy," Oxford Economic Papers, Oxford University Press, vol. 62(2), pages 234-260, April.
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    1. Emmanuel Dhyne & Selen Sarisoy Guerin, 2014. "Outward foreign direct investment and domestic performance : In search of a causal link," Working Paper Research 272, National Bank of Belgium.
    2. Defeng Zhang & Zhilu Sun, 2023. "The Impact of Agricultural Global Value Chain Participation on Agricultural Total Factor Productivity," Agriculture, MDPI, vol. 13(11), pages 1-20, November.
    3. Prajukta Tripathy & Pragyanrani Behera & Bikash Ranjan Mishra, 2023. "Study of linkages between productivity, export, and outward foreign direct investment: An empirical perspective of Indian manufacturing industries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1527-1548, April.
    4. Dong, Zhixiao & Miao, Zhuang & Zhang, Yan, 2021. "The impact of China’s outward foreign direct investment on domestic innovation," Journal of Asian Economics, Elsevier, vol. 75(C).
    5. Zeng, Xiaoming & Chen, Hao & Yin, Yanzhao & Liu, Youjin, 2024. "CEOs’ financial work experience and firms’ outbound investments," Journal of Multinational Financial Management, Elsevier, vol. 74(C).
    6. Li Dong & Jinlong Chen & Huiling Guo, 2024. "Managerial myopia and outward foreign direct investment: Evidence from Chinese listed firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(2), pages 1026-1042, March.

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    Keywords

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    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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