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Explaining employment changes in foreign manufacturing investment in the UK

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  • Williams, David

Abstract

This article tests the view that the impact which foreign direct investment (FDI) has upon employment within the host economy will vary according to the entry mode which the multinational enterprise (MNE) chooses, the type of subsidiary and the nationality of the parent organisation which is established in the regional economy. Data were collected from the subsidiaries of foreign-owned firms in the UK. A model was devised and tested with estimations using this data. The results provide support for the view that the impact of FDI may be differentiated by entry mode, nationality and subsidiary type. Specifically, firms which entered by way of greenfield investment created positive employment effects as compared to those which entered by means of a merger or acquisition where the effects were relatively negative. There is some evidence that impact is also ownership specific. Finally, those subsidiaries which performed more value-added functions had a positive effect on employment.

Suggested Citation

  • Williams, David, 2003. "Explaining employment changes in foreign manufacturing investment in the UK," International Business Review, Elsevier, vol. 12(4), pages 479-497, August.
  • Handle: RePEc:eee:iburev:v:12:y:2003:i:4:p:479-497
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    References listed on IDEAS

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    1. Stephen Pudney & Michael Shields, 2000. "Gender, race, pay and promotion in the British nursing profession: estimation of a generalized ordered probit model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(4), pages 367-399.
    2. Breandan O Huallachain & Neil Reid, 1997. "Acquisition versus Greenfield Investment: The Location and Growth of Japanese Manufacturers in the United States," Regional Studies, Taylor & Francis Journals, vol. 31(4), pages 403-416.
    3. Kendall Roth & Allen J Morrison, 1992. "Implementing Global Strategy: Characteristics of Global Subsidiary Mandates," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(4), pages 715-735, December.
    4. Neil Hood & James Taggart, 1997. "German Foreign Direct Investment in the UK and Ireland: Survey Evidence," Regional Studies, Taylor & Francis Journals, vol. 31(2), pages 139-150.
    5. Taggart, J. H., 1996. "Multinational manufacturing subsidiaries in Scotland: Strategic role and economic impact," International Business Review, Elsevier, vol. 5(5), pages 447-468, October.
    6. Driffield, Nigel, 1999. "Indirect Employment Effects of Foreign Direct Investment into the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(3), pages 207-221, July.
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    Cited by:

    1. repec:wfo:wstudy:59183 is not listed on IDEAS
    2. Desislava Dikova & Keith Brouthers, 2016. "International Establishment Mode Choice: Past, Present and Future," Management International Review, Springer, vol. 56(4), pages 489-530, August.
    3. Fabienne Fortanier & Selwyn Moons, 2011. "Foreign Investors in The Netherlands: Heterogeneous Employment and Productivity Effects," De Economist, Springer, vol. 159(4), pages 511-531, December.

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