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Nature and determinants of productivity growth of foreign subsidiaries in Central and East European countries

Author

Listed:
  • Slavo Radosevic

    (UCL School of Slavonic and East European Studies)

  • Boris Majcen

    () (Institute for Economic Research, Ljubljana)

  • Matija Rojec

    () (University of Ljubljana and Institute of Macroeconomic Analysis and Development)

Abstract

The paper examines the determinants of productivity growth in foreign manufacturing subsidiaries in five Central and East European (CEE) countries by analysing patterns of control, nature of firms' capabilities and firms' market orientation. Building on the so called 'developmental subsidiaries' perspective we show that productivity growth is determined jointly by corporate governance, production capability and market orientation variables. CEE subsidiaries have relatively strong autonomy over control of their business functions, but within a dominantly production oriented mandate. Majority foreign equity share has a significant and positive impact on subsidiaries' productivity growth. These results present very strong regional characteristic.

Suggested Citation

  • Slavo Radosevic & Boris Majcen & Matija Rojec, 2006. "Nature and determinants of productivity growth of foreign subsidiaries in Central and East European countries," UCL SSEES Economics and Business working paper series 68, UCL School of Slavonic and East European Studies (SSEES).
  • Handle: RePEc:see:wpaper:68
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    References listed on IDEAS

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    1. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
    2. Damijan, Joze P. & Knell, Mark & Majcen, Boris & Rojec, Matija, 2003. "The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries," Economic Systems, Elsevier, vol. 27(2), pages 189-204, June.
    3. Filatotchev, Igor & Wright, Mike & Uhlenbruck, Klaus & Tihanyi, Laszlo & Hoskisson, Robert E., 2003. "Governance, organizational capabilities, and restructuring in transition economies," Journal of World Business, Elsevier, vol. 38(4), pages 331-347, November.
    4. Kendall Roth & Allen J Morrison, 1992. "Implementing Global Strategy: Characteristics of Global Subsidiary Mandates," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(4), pages 715-735, December.
    5. Gábor Hunya (ed.), 2000. "Integration Through Foreign Direct Investment," Books, Edward Elgar Publishing, number 1839, October.
    6. Michael Landesmann, 2000. "Structural Change in the Transition Economies, 1989 to 1999," wiiw Research Reports 269, The Vienna Institute for International Economic Studies, wiiw.
    7. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    8. Laura Resmini, 2000. "The Determinants of Foreign Direct Investment in the CEECs: New evidence from sectoral patterns," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(3), pages 665-689, November.
    9. Paterson, S. L. & Brock, D. M., 2002. "The development of subsidiary-management research: review and theoretical analysis," International Business Review, Elsevier, vol. 11(2), pages 139-163, April.
    10. Richard Harris & Catherine Robinson, 2004. "Productivity Impacts and Spillovers from Foreign Ownership in the United Kingdom," National Institute Economic Review, National Institute of Economic and Social Research, vol. 187(1), pages 58-75, January.
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    Cited by:

    1. repec:nms:joeems:doi_10.1688/1862-0019_jeems_2013_03_pisoni is not listed on IDEAS
    2. repec:spr:jknowl:v:9:y:2018:i:1:d:10.1007_s13132-015-0339-3 is not listed on IDEAS
    3. Slavo Radosevic & Esin Yoruk, 2016. "A New Metrics Of Technology Upgrading: The Central And East European Countries In A Comparative Perspective," UCL SSEES Economics and Business working paper series 2016-2, UCL School of Slavonic and East European Studies (SSEES).
    4. repec:eee:intman:v:24:y:2018:i:2:p:108-122 is not listed on IDEAS
    5. Rajneesh Narula & José Guimón, 2012. "The Role of Multinational Corporations in the National Innovation Systems of the EU New Member States," Chapters,in: Innovation and Institutional Embeddedness of Multinational Companies, chapter 13 Edward Elgar Publishing.
    6. Kravtsova, Victoria & Radosevic, Slavo, 2012. "Are systems of innovation in Eastern Europe efficient?," Economic Systems, Elsevier, vol. 36(1), pages 109-126.
    7. RNuket Kirci Cevik & Sel Dibooglu & Ali M. Kutan, 2016. "Real and Financial Sector Studies in Central and Eastern Europe: A Review," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(1), pages 2-31, February.

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