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Do foreign and domestic firms behave any different during economic slowdowns?

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  • Varum, Celeste Amorim
  • Rocha, Vera Catarina Barros

Abstract

The global crisis has called to further reflection on the role of multinationals in host economies during crisis. The evidence on this matter is scarce and no definite conclusions were achieved. Using panel data analysis, this paper examines the link between foreign ownership, firm employment and turnover growth over 20 years and during economic downturns in particular. We analyse the determinants of firm employment and turnover growth and investigate whether there are significant differences in both variables among domestic and foreign firms when controlling for firm and industry specificities. Additionally we assess if the foreignness effect alters during economic downturns. After controlling for several firm and industry characteristics, we find no significant differences between domestic and foreign firms in what concerns employment growth. However, our results suggest that foreign ownership may affect positively firms' sales turnover growth during recessions.

Suggested Citation

  • Varum, Celeste Amorim & Rocha, Vera Catarina Barros, 2011. "Do foreign and domestic firms behave any different during economic slowdowns?," International Business Review, Elsevier, vol. 20(1), pages 48-59, February.
  • Handle: RePEc:eee:iburev:v:20:y:2011:i:1:p:48-59
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    Citations

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    Cited by:

    1. Golikova Victoria & Kuznetsov Boris, 2016. "The Role of Innovation and Globalization Strategies in Post-Crisis Recovery," HSE Working papers WP BRP 123/EC/2016, National Research University Higher School of Economics.
    2. Yildiz, Harun Emre & Fey, Carl Felix, 2012. "The liability of foreignness reconsidered: New insights from the alternative research context of transforming economies," International Business Review, Elsevier, vol. 21(2), pages 269-280.
    3. Lo Turco, Alessia & Maggioni, Daniela, 2014. "The micro evolution of trade and turnover in Turkey under the global crisis," Economic Systems, Elsevier, vol. 38(3), pages 397-414.
    4. Bartz, Wiebke & Winkler, Adalbert, 2016. "Flexible or fragile? The growth performance of small and young businesses during the global financial crisis — Evidence from Germany," Journal of Business Venturing, Elsevier, vol. 31(2), pages 196-215.
    5. Varum, Celeste & Rocha, Vera Catarina & Valente da Silva, Hélder, 2014. "Economic slowdowns, hazard rates and foreign ownership," International Business Review, Elsevier, vol. 23(4), pages 761-773.
    6. Adalgiso Amendola & Anna Maria Ferragina & Rosanna Pittiglio & Filippo Reganati, 2012. "Are exporters and multinational firms more resilient over a crisis? First evidence for manufacturing enterprises in Italy," Economics Bulletin, AccessEcon, vol. 32(3), pages 1914-1926.
    7. repec:eco:journ1:2017-02-08 is not listed on IDEAS
    8. repec:prg:jnlpep:v:2017:y:2017:i:3:id:617:p:345-359 is not listed on IDEAS
    9. Bamiatzi, Vassiliki & Cavusgil, Salih Tamer & Jabbour, Liza & Sinkovics, Rudolf R., 2014. "Does business group affiliation help firms achieve superior performance during industrial downturns? An empirical examination," International Business Review, Elsevier, vol. 23(1), pages 195-211.
    10. Michael Moritz & Bastian Stockinger & Merlind Trepesch, 2017. "Multinational Resilience or Dispensable Jobs? German FDI and Employment in the Czech Republic Around the Great Recession," Prague Economic Papers, University of Economics, Prague, vol. 2017(3), pages 345-359.
    11. 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.
    12. Celeste Varum & Vera Rocha, 2013. "Employment and SMEs during crises," Small Business Economics, Springer, vol. 40(1), pages 9-25, January.
    13. Verdu, Antonio J. & Gómez-Gras, José María & Martínez-Mateo, Jesús, 2012. "Value creation through production offshore–inshore strategies in a footwear industry cluster: A coevolutionary perspective," International Business Review, Elsevier, vol. 21(3), pages 342-356.

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