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Firm Growth in Multinational Corporate Groups

Listed author(s):
  • Oberhofer, Harald

    ()

    (University of Salzburg)

  • Pfaffermayr, Michael

    ()

    (Department of Economics and Statistics, University of Innsbruck)

This paper formulates an econometric firm growth model that explicitly accounts for interdependence of growth performance within multinational corporate networks. We apply a recently introduced IV-estimation procedure for peer group effects to directly test for externalities within multinational corporate networks. Using European firm level data, our results reveal positive externalities within vertically organized multinational networks, while they are negative for horizontally organized ones. In the former case, multinational corporate groups are more stable and adjust faster on average. In the latter case, externalities lead to more heterogeneity in the firm growth processes within the network and slower average size adjustment.

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Paper provided by University of Salzburg in its series Working Papers in Economics with number 2010-7.

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Length: 31 pages
Date of creation: 04 Mar 2010
Handle: RePEc:ris:sbgwpe:2010_007
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  16. P. A. Geroski, 2005. "Understanding the implications of empirical work on corporate growth rates," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 129-138.
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