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Going multinational: What are the effects on home market performance?

  • Jäckle, Robert

A number of recent studies nd evidence for the existence of a persistent performance gap between multinational enterprises (MNE) and their domestic competitors. Therefore, the question arises whether successful rms become MNEs or whether going abroad improves home market performance. This paper investigates to what extent MNEs have superior performance characteristics, both prior to and after they have switched from national to multinational activities. In the rst case results are quite clear: Future multinationals outperform domestic rms. Since self-selection occurs, an endogenous treatment approach is necessary for comparing ex-post performance of rms. Using probit estimates of the decision to become a MNE, Heckman's (1978) treatment model is applied to account for potential endogeneity issues. The results suggest that after switching, both productivity and wage growth are higher for newly founded MNEs than for national rms. Employment growth is superior before switching but does not exhibit signi cantly higher ex-post growth rates. Moreover, capital intensities at multinationals evolve towards the use of capital.

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2006,03.

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Date of creation: 2006
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Handle: RePEc:zbw:bubdp1:4240
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  1. Becker, Sasha O & Ekholm, Karolina & Jackle, Robert & Muendler, Marc-Andreas, 2004. "Location Choices and Employment Decisions: A Comparison of German and Swedish Multinationals," University of California at San Diego, Economics Working Paper Series qt2fq490pd, Department of Economics, UC San Diego.
  2. Muendler, Marc-Andreas & Becker, Sascha O., 2007. "The effect of FDI on job separation," Discussion Paper Series 1: Economic Studies 2007,01, Deutsche Bundesbank, Research Centre.
  3. Marc-Andreas Muendler & Sascha O. Becker, 2009. "Margins of Multinational Labor Substitution," NBER Working Papers 14776, National Bureau of Economic Research, Inc.
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  6. Michael Pfaffermayr, 1999. "Ownership Advantages, Foreign Production and Productivity: Evidence from Austrian Manufacturing Firms," Review of Industrial Organization, Springer, vol. 15(4), pages 379-396, December.
  7. John Y. Campbell & Jens Hilscher & Jan Szilagyi, 2006. "In Search of Distress Risk," NBER Working Papers 12362, National Bureau of Economic Research, Inc.
  8. Koetter, Michael & Bos, Jaap W. B. & Heid, Frank & Kool, Clemens J. M. & Kolari, James W. & Porath, Daniel, 2005. "Accounting for distress in bank mergers," Discussion Paper Series 2: Banking and Financial Studies 2005,09, Deutsche Bundesbank, Research Centre.
  9. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
  10. Jens Matthias Arnold & Katrin Hussinger, 2004. "Export Behavior and Firm Productivity in German Manufacturing: A firm-level analysis," International Trade 0403007, EconWPA, revised 02 Nov 2004.
  11. Slacalek, Jirka & Fritsche, Ulrich & Dovern, Jonas & Döpke, Jörg, 2005. "European inflation expectations dynamics," Discussion Paper Series 1: Economic Studies 2005,37, Deutsche Bundesbank, Research Centre.
  12. Marin, Dalia, 2004. "A Nation of Poets and Thinkers - Less so with Eastern Enlargement? Austria and Germany," CEPR Discussion Papers 4358, C.E.P.R. Discussion Papers.
  13. Chiara Criscuolo & Ralf Martin, 2004. "Multinationals and U.S. Productivity Leadership: Evidence from Great Britain," OECD Science, Technology and Industry Working Papers 2004/5, OECD Publishing.
  14. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July.
  15. Sascha O. Becker & Robert Jäckle & Marc-Andreas Mündler, 2005. "Kehren deutsche Firmen ihrer Heimat den Rücken? - Ausländische Direktinvestitionen deutscher Unternehmen," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 58(01), pages 23-33, 01.
  16. Barba Navaretti, Giorgio & Castellani, Davide, 2004. "Investments Abroad and Performance at Home: Evidence from Italian Multinationals," CEPR Discussion Papers 4284, C.E.P.R. Discussion Papers.
  17. von Kalckreuth, Ulf, 2005. "A "wreckers theory" of financial distress," Discussion Paper Series 1: Economic Studies 2005,40, Deutsche Bundesbank, Research Centre.
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