Multinational Enterprises, Technological Intensity and Firm Survival. Evidence from Italian Manufacturing and Services Firms

This paper investigates two main questions: Are affiliates of foreign multinationals more likely to exit the market than domestic firms? Does the exit probability of foreign firms depend on the technological environment in which they operate? Controlling for a set of firm- and industry-specific characteristics, our results show that Italian firms owned by foreign firms are more footloose than domestic ones regardless of the macro sector of activity in which they are involved (i.e. manufacturing and services). By taking into consideration the technological environment where firms operate, we also find that foreign ownership still exerts a negative influence on firm survival in both less and more technologically advanced industries. However, there is evidence of a stronger negative influence on the survival of firms operating in low- and medium-low technology industries and in less-knowledge-intensive services. Copyright International Atlantic Economic Society 2015