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International Acquisitions, Domestic Competition and Firm Performance

Author

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  • Sourafel Girma
  • Steve Thompson
  • Peter Wright

Abstract

This paper investigates the impact of foreign acquisition on domestic firm productivity. In contrast to previous studies it applies a difference-in-differences methodology based on a matched panel of firms in order to trace out such changes. It finds evidence of significant positive productivity effects following acquisition by US and European multinationals, at least in technology importing industries. Higher productivity gains are achieved the more competitive the industry in which acquisition occurs.

Suggested Citation

  • Sourafel Girma & Steve Thompson & Peter Wright, 2006. "International Acquisitions, Domestic Competition and Firm Performance," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(3), pages 335-349.
  • Handle: RePEc:taf:ijecbs:v:13:y:2006:i:3:p:335-349
    DOI: 10.1080/13571510600961254
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    References listed on IDEAS

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    1. Conyon, Martin J. & Girma, Sourafel & Thompson, Steve & Wright, Peter W., 2002. "The impact of mergers and acquisitions on company employment in the United Kingdom," European Economic Review, Elsevier, vol. 46(1), pages 31-49, January.
    2. Bottasso, Anna & Sembenelli, Alessandro, 2001. "Market power, productivity and the EU Single Market Program: Evidence from a panel of Italian firms," European Economic Review, Elsevier, vol. 45(1), pages 167-186, January.
    3. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters,in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
    4. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    5. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    6. Hay, Donald A & Liu, Guy S, 1997. "The Efficiency of Firms: What Difference Does Competition Make?," Economic Journal, Royal Economic Society, vol. 107(442), pages 597-617, May.
    7. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    8. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    9. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
    10. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    11. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
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    Cited by:

    1. Driffield, Nigel L. & Mickiewicz, Tomasz & Temouri, Yama, 2013. "Institutional reforms, productivity and profitability: From rents to competition?," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 583-600.
    2. Sandra M. Leitner, 2015. "Firm growth and financing constraints in the NMS-10 and the Western Balkan countries – a comparative analysis," wiiw Balkan Observatory Working Papers 115, The Vienna Institute for International Economic Studies, wiiw.
    3. Barbara M. Roberts & Steve Thompson & Katarzyna Mikolajczyk, 2008. "Privatization, Foreign Acquisition and the Motives for FDI in Eastern Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(3), pages 408-427, October.
    4. Wali Ullah, 2017. "Evolving corporate governance and firms performance: evidence from Japanese firms," Economics of Governance, Springer, vol. 18(1), pages 1-33, February.
    5. Sergio Salis, 2008. "Foreign Acquisition and Firm Productivity: Evidence from Slovenia," The World Economy, Wiley Blackwell, vol. 31(8), pages 1030-1048, August.
    6. repec:eee:ecosys:v:41:y:2017:i:2:p:179-202 is not listed on IDEAS

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    Keywords

    Foreign; Acquisition; Productivity;

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