IDEAS home Printed from https://ideas.repec.org/p/zbw/fhfwps/22.html
   My bibliography  Save this paper

International ownership and SMEs in Middle Eastern and African economies

Author

Listed:
  • Baliamoune-Lutz, Mina
  • Basuony, Mohamed A. K.
  • Lutz, Stefan
  • Mohamed, Ehab K. A.

Abstract

Empirical evidence suggests that international ownership of local firms supports firm performance and growth through various channels such as financing, technology transfer, and improved access to international markets. This is particularly true for small and medium-sized enterprises (SMEs) that otherwise may lack access to a variety of vital resources. At the same time small and medium-sized enterprise (SME) formation may promote economic development. The relationship between firm performance and international ownership has been well explored for firms in developed economies but this is not the case for firms - including SMEs - in Africa and the Middle East. Largely due to lack of relevant cross-country financial data, existing literature on African and Middle-Eastern firms has presented survey-based evidence on firm performance while evidence based on detailed financial information remains lacking. The present paper aims at filling this research gap. We identify African and Middle-Eastern SMEs operating in the formal sector and examine the impact of ownership structure on firm performance. We use cross-sectional financial data covering about 25,500 companies - including about 30% SMEs - in 69 African and Middle-Eastern countries for the years 2006 to 2015. Our results indicate that international ownership has significant positive association with firm performance. For internationally-owned SMEs this appears to be true despite lower levels of equity and debt capital, implying that internationally-owned firms use international resources - other than capital - more efficiently!

Suggested Citation

  • Baliamoune-Lutz, Mina & Basuony, Mohamed A. K. & Lutz, Stefan & Mohamed, Ehab K. A., 2022. "International ownership and SMEs in Middle Eastern and African economies," Working Paper Series 22, Frankfurt University of Applied Sciences, Faculty of Business and Law.
  • Handle: RePEc:zbw:fhfwps:22
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/249050/1/1786139367.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Maria Minniti, 2010. "Female Entrepreneurship and Economic Activity," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 22(3), pages 294-312, July.
    2. Tidiane Kinda, 2012. "Foreign ownership, sales to multinationals and firm efficiency: the case of Brazil, Morocco, Pakistan, South Africa and Vietnam," Applied Economics Letters, Taylor & Francis Journals, vol. 19(6), pages 551-555, April.
    3. Imed Zaiem, 2012. "Overview of export problems and their illustrative factors case study: Tunisian SMEs," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 5(2), pages 89-106.
    4. Chiara Bentivogli & Litterio Mirenda, 2017. "Foreign ownership and performance: evidence from a panel of Italian firms," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Uses of central balance sheet data offices' information, volume 45, Bank for International Settlements.
    5. Zvi Griliches, 1998. "R&D and Productivity: The Econometric Evidence," NBER Books, National Bureau of Economic Research, Inc, number gril98-1, March.
    6. Waldkirch, Andreas & Ofosu, Andra, 2010. "Foreign Presence, Spillovers, and Productivity: Evidence from Ghana," World Development, Elsevier, vol. 38(8), pages 1114-1126, August.
    7. Mark E. Doms & J . Bradford Jensen, 1998. "Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 235-258, National Bureau of Economic Research, Inc.
    8. Christian Rogerson, 2000. "Successful SMEs in South Africa: The case of clothing producers in the Witwatersrand," Development Southern Africa, Taylor & Francis Journals, vol. 17(5), pages 687-716.
    9. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc.
    10. Fitriya Fauzi & Stuart Locke, 2012. "Board Structure, Ownership Structure and Firm Performance: A Study of New Zealand Listed-Firms," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 8(2), pages 43-67.
    11. Stefan Lutz & Oleksandr Talavera & Sang-Min Park, 2008. "Effects of Foreign Presence in a Transition Economy: Regional and Industrywide Investments and Firm-Level Exports in Ukrainian Manufacturing," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(5), pages 82-98, September.
    12. Rachel Griffith & Stephen Redding & Helen Simpson, 2004. "Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 440-456, Autumn.
    13. Duc Nam Phung & Anil V. Mishra, 2016. "Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 63-98, March.
    14. Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), 2012. "The Regional Economics of Knowledge and Talent," Books, Edward Elgar Publishing, number 13425.
    15. John Philipp Weche Gelübcke, 2013. "Foreign ownership and firm performance in German services," The Service Industries Journal, Taylor & Francis Journals, vol. 33(15-16), pages 1564-1598, December.
    16. Tarek Ibrahim Eldomiaty & Ehab K.A. Mohamed, 2008. "Is debt governance structure relevant to firm operating performance in Egypt? A dynamic approach," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 1(2), pages 216-249.
    17. Hintošová Aneta Bobenič & Kubíková Zuzana, 2016. "The effect of the degree of foreign ownership on firms' performance," Review of Economic Perspectives, Sciendo, vol. 16(1), pages 29-44, March.
    18. Ali Osman Gurbuz & Asli Aybars, 2010. "The Impact of Foreign Ownership on Firm Performance, Evidence from an Emerging Market: Turkey," American Journal of Economics and Business Administration, Science Publications, vol. 2(4), pages 350-359, November.
    19. Yasar, Mahmut & Morrison Paul, Catherine J., 2007. "International linkages and productivity at the plant level: Foreign direct investment, exports, imports and licensing," Journal of International Economics, Elsevier, vol. 71(2), pages 373-388, April.
    20. Theodore Syriopoulos & Michael Tsatsaronis, 2012. "Corporate Governance Mechanisms and Financial Performance: CEO Duality in Shipping Firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 2(1), pages 1-30, June.
    21. Jun Yeup Kim & Le-Yin Zhang, 2008. "Formation of Foreign Direct Investment Clustering-A New Path to Local Economic Development? The Case of Qingdao," Regional Studies, Taylor & Francis Journals, vol. 42(2), pages 265-280.
    22. Rajah Rasiah & Geoffrey Gachino, 2005. "Are Foreign Firms More Productive and Export- and Technology-intensive than Local Firms in Kenyan Manufacturing?," Oxford Development Studies, Taylor & Francis Journals, vol. 33(2), pages 211-227.
    23. Andrea F. Presbitero & Roberta Rabellotti & Claudia Piras, 2014. "Barking up the Wrong Tree? Measuring Gender Gaps in Firm's Access to Finance," Journal of Development Studies, Taylor & Francis Journals, vol. 50(10), pages 1430-1444, November.
    24. Neil Foster‐McGregor & Anders Isaksson & Florian Kaulich, 2015. "Foreign Ownership and Performance in Sub‐Saharan African Manufacturing and Services," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(7), pages 1197-1222, October.
    25. Duc Nam Phung & Anil V. Mishra, 2016. "Corporation Diversification and Firm Performance: Evidence from Vietnamese Listed Firms," Australian Economic Papers, Wiley Blackwell, vol. 55(4), pages 386-408, December.
    26. Mary Hallward-Driemeier, 2013. "Enterprising Women : Expanding Economic Opportunities in Africa," World Bank Publications - Books, The World Bank Group, number 13785, December.
    27. Natália Barbosa & Helen Louri, 2005. "Corporate Performance: Does Ownership Matter? A Comparison of Foreign- and Domestic-Owned Firms in Greece and Portugal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(1), pages 73-102, August.
    28. Chiara Guardo & Giovanni Valentini, 2007. "Taking Actively Advantage of MNCs’ Presence," Small Business Economics, Springer, vol. 28(1), pages 55-68, January.
    29. Richard Harris & Catherine Robinson, 2003. "Foreign Ownership and Productivity in the United Kingdom Estimates for U.K. Manufacturing Using the ARD," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(3), pages 207-223, May.
    30. Chiara Bentivogli & Litterio Mirenda, 2017. "Foreign Ownership and Performance: Evidence from Italian Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(3), pages 251-273, September.
    31. Griliches, Zvi, 1998. "R&D and Productivity," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226308869, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:rwirep:0050 is not listed on IDEAS
    2. Ahmed Fayez Abdelgouad & Christian Pfeifer & John P Weche Gelübcke, 2015. "Ownership structure and firm performance in the Egyptian manufacturing sector," Economics Bulletin, AccessEcon, vol. 35(4), pages 2197-2212.
    3. Stiebale, Joel & Reize, Frank, 2011. "The impact of FDI through mergers and acquisitions on innovation in target firms," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 155-167, March.
    4. Joel Stiebale & Frank Reize, 2008. "The Impact of FDI on Innovation in Target Firms," Ruhr Economic Papers 0050, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Adugna Lemi & Ian Wright, 2020. "Exports, foreign ownership, and firm-level efficiency in Ethiopia and Kenya: an application of the stochastic frontier model," Empirical Economics, Springer, vol. 58(2), pages 669-698, February.
    6. Lucian Belascu & Alexandra Horobet & Georgiana Vrinceanu & Consuela Popescu, 2021. "Performance Dissimilarities in European Union Manufacturing: The Effect of Ownership and Technological Intensity," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    7. Criscuolo, Chiara & Mariagrazia, Squicciarini & Olavi, Lehtoranta, 2010. "R&D, innovation and productivity, and the CIS: sampling, specification and comparability issues," MPRA Paper 39261, University Library of Munich, Germany.
    8. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna & Guidi, Francesco, 2016. "R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis," Research Policy, Elsevier, vol. 45(10), pages 2069-2086.
    9. Kartikeya Singh & Cody Kallen & Aparna Mathur, 2020. "Substance Requirements in the International Taxation of Intangible Capital: A Double-edged Sword?," Public Finance Review, , vol. 48(2), pages 139-177, March.
    10. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2014. "Importing, exporting and performance in sub-Saharan African manufacturing firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 309-336, May.
    11. Bettina Peters & Mark J. Roberts & Van Anh Vuong & Helmut Fryges, 2013. "Estimating Dynamic R&D Demand: An Analysis of Costs and Long-Run Benefits," NBER Working Papers 19374, National Bureau of Economic Research, Inc.
    12. Bronwyn Hall & Francesca Lotti & Jacques Mairesse, 2009. "Innovation and productivity in SMEs: empirical evidence for Italy," Small Business Economics, Springer, vol. 33(1), pages 13-33, June.
    13. Tica Josip & Šikić Luka, 2019. "Endogenous Convergence and International Technological Diffusion Channels," South East European Journal of Economics and Business, Sciendo, vol. 14(2), pages 34-53, December.
    14. Schiffbauer, Marc & Siedschlag, Iulia & Ruane, Frances, 2017. "Do foreign mergers and acquisitions boost firm productivity?," International Business Review, Elsevier, vol. 26(6), pages 1124-1140.
    15. Adriana Peluffo, 2015. "Foreign Direct Investment, Productivity, Demand for Skilled Labour and Wage Inequality: An Analysis of Uruguay," The World Economy, Wiley Blackwell, vol. 38(6), pages 962-983, June.
    16. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    17. Burcu Fazlıoğlu & Başak Dalgıç & Ahmet Burçin Yereli, 2019. "The effect of innovation on productivity: evidence from Turkish manufacturing firms," Industry and Innovation, Taylor & Francis Journals, vol. 26(4), pages 439-460, April.
    18. Khajehpour, Hossein & Miremadi, Iman & Saboohi, Yadollah & Tsatsaronis, George, 2020. "A novel approach for analyzing the effectiveness of the R&D capital for resource conservation: Comparative study on Germany and UK electricity sectors," Energy Policy, Elsevier, vol. 147(C).
    19. Nikolay Chernyshev, 2017. "The Relationship between R&D and Competition: Reconciling Theory and Evidence," CDMA Working Paper Series 201704, Centre for Dynamic Macroeconomic Analysis.
    20. Francesco Di Comite & D'Artis Kancs & Wouter Torfs, 2015. "Macroeconomic Modelling of R&D and Innovation Policies," JRC Research Reports JRC89558, Joint Research Centre (Seville site).
    21. Zuzana Smeets Kristkova & Cornelis Gardebroek & Michiel van Dijk & Hans van Meijl, 2017. "The impact of R&D on factor-augmenting technical change – an empirical assessment at the sector level," Economic Systems Research, Taylor & Francis Journals, vol. 29(3), pages 385-417, July.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fhfwps:22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwfhfde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.