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Firm Growth in Multinational Corporate Groups

Author

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  • Oberhofer, Harald

    (University of Salzburg)

  • Pfaffermayr, Michael

    (Department of Economics and Statistics, University of Innsbruck)

Abstract

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.

Suggested Citation

  • Oberhofer, Harald & Pfaffermayr, Michael, 2010. "Firm Growth in Multinational Corporate Groups," Working Papers in Economics 2010-7, University of Salzburg.
  • Handle: RePEc:ris:sbgwpe:2010_007
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    Cited by:

    1. Harald Oberhofer, 2012. "Firm Growth, European Industry Dynamics and Domestic Business Cycles," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(3), pages 316-337, July.
    2. Abdussalam Aljadani & Hassen Toumi, 2019. "Causal effect of mergers and acquisitions on EU bank productivity," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-22, December.
    3. Martin Falk, 2008. "Testing Gibrat's Law for European Multinational Enterprises," WIFO Studies, WIFO, number 34231, February.
    4. Jesús Cuaresma & Harald Oberhofer & Gallina Vincelette, 2014. "Institutional barriers and job creation in Central and Eastern Europe," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-29, December.
    5. World Bank, 2013. "EU11 Regular Economic Report, Issue #27, June 2013," World Bank Publications - Reports 16527, The World Bank Group.
    6. Peter Huber & Harald Oberhofer & Michael Pfaffermayr, 2014. "Job creation and the intra-distribution dynamics of the firm size distribution," Industrial and Corporate Change, Oxford University Press, vol. 23(1), pages 171-197, February.
    7. Harald Oberhofer, 2013. "Employment Effects of Acquisitions: Evidence from Acquired European Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(3), pages 345-363, May.
    8. Alex Coad & Christina Guenther, 2014. "Processes of firm growth and diversification: theory and evidence," Small Business Economics, Springer, vol. 43(4), pages 857-871, December.
    9. Nadine LEVRATTO & Denis CARRÉ, 2013. "La Croissance Des Établissements Industriels : Une Question De Localisation," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 93-120.
    10. Mohamed Amara & AbdelRahmen El Lahga, 2015. "A note on MAR and Jacobs externalities in the Tunisian manufacturing industries," Letters in Spatial and Resource Sciences, Springer, vol. 8(2), pages 151-167, July.
    11. Simon Bösenberg & Peter H. Egger & Valeria Merlo & Georg Wamser, 2018. "Measuring The Interdependence Of Multinational Firms' Foreign Investments," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1064-1088, April.
    12. Oberhofer, Harald & Vincelette, Gallina A, 2013. "Determinants of job creation in eleven new EU member states : evidence from firm level data," Policy Research Working Paper Series 6533, The World Bank.

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    More about this item

    Keywords

    Firm growth; Size Adjustment; Multinational Corporate Groups; Peer Group Effect Estimation;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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