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Why are Multinationals “Footloose”?

Author

Listed:
  • Tomohiko Inui
  • Richard Kneller
  • Toshiyuki Matsuura
  • Danny McGowan

Abstract

This paper investigates why multinational ownership is found to increase the probability that a plant will exit. It does so by using Japanese plant data linked to firm data. Plants belonging to a multinational are 9 percentage points more likely to exit when plant, firm and industry characteristics are conditioned on. We find that the “footloose” effect is attributable to multinationals closing their weakest plants. Plants that are small, capital un-intensive and have low input intensities relative to the firm are more vulnerable to closure within multinationals. We also find a strong similarity between the plants that are shut by multiplant firms regardless of whether they have overseas affiliates or not.

Suggested Citation

  • Tomohiko Inui & Richard Kneller & Toshiyuki Matsuura & Danny McGowan, 2009. "Why are Multinationals “Footloose”?," Discussion Papers 09/27, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:09/27
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2009/09-27.pdf
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