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Re-investment and the survival of foreign-owned plants

  • Jonathan Jones
  • Colin Wren
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    Foreign-owned plants have higher conditional exit rates, but this paper tests the hypothesis that re-investment "embeds" these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up ("greenfield") and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first reinvestment and survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but this is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of start-up plants. The paper offers little support for re-investment as a source of "embeddedness".

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    File URL: http://eprints.lse.ac.uk/33138/
    File Function: Open access version.
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    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 33138.

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    Length: 45 pages
    Date of creation: Aug 2008
    Date of revision:
    Handle: RePEc:ehl:lserod:33138
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    Web page: http://www.lse.ac.uk/

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