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Multinational Enterprises and Their Domestic Counterparts: Past Research, Current Issues and Future Directions

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  • Christian Bellak

    () (Department of Economics, Vienna University of Economics & B.A.)

Abstract

This paper reviews and summarises the results of selected empirical studies on performance gaps between multinational enterprises and their domestic counterparts. Performance gaps arise in such fields as productivity, profitability, wages, skills, factor intensity and growth. Of central interest is the question to what extent is foreign ownership an explanatory factor of performance gaps? Empirical evidence supports the existence of performance gaps between foreign and domestic firms, yet foreign ownership is a much less important explanatory factor than normally assumed. Structural factors like industry, size and multi-nationality per se are more important. It is argued that such results are broadly consistent with those derived in the literatures on ownership change, on foreign entry and on spillovers. The concluding section discusses the normative issue whether there is a case for investment promotion policies to discriminate between firms on the basis of performance gaps by ownership.

Suggested Citation

  • Christian Bellak, 2001. "Multinational Enterprises and Their Domestic Counterparts: Past Research, Current Issues and Future Directions," Working Papers geewp18, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  • Handle: RePEc:wiw:wiwgee:geewp18
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    More about this item

    Keywords

    multinational enterprises; foreign ownership; domestic firms; Foreign Direct Investment; performance gaps; firm performance;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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