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International Investment and Firm Performance: Empirical Evidence from Small Open Economies

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  • Kaitila, Ville
  • McQuinn, John
  • Siedschlag, Iulia
  • Zhang, Xiaoheng

Abstract

Abstract: This paper examines the causal link between foreign investment and firm performance in six small open economies in the European Union. Specifically, using micro data for manufacturing and services over the period 2001-2009, we analyse the effects of foreign mergers and acquisitions on labour productivity and employment growth up to five years after acquisition. Our results indicate that foreign investors tend to acquire larger firms in both manufacturing and services. Other characteristics of acquired firms differ across countries and between manufacturing and services. Taken together, our estimates suggest that foreign investment had stronger effects on firm performance in services in comparison to manufacturing.

Suggested Citation

  • Kaitila, Ville & McQuinn, John & Siedschlag, Iulia & Zhang, Xiaoheng, 2013. "International Investment and Firm Performance: Empirical Evidence from Small Open Economies," ETLA Reports 6, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:report:6
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    References listed on IDEAS

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    1. repec:eee:iburev:v:26:y:2017:i:6:p:1124-1140 is not listed on IDEAS
    2. Schiffbauer, Marc & Siedschlag, Iulia & Ruane, Frances, 2017. "Do foreign mergers and acquisitions boost firm productivity?," International Business Review, Elsevier, vol. 26(6), pages 1124-1140.

    More about this item

    Keywords

    multinational firms; productivity; employment; propensity score matching;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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