Firm Heterogeneity and Choice of Ownership Structure: An Empirical Analysis of German FDI in India

Holger Görg (), Verena Lauber, Birgit Meyer and Peter Nunnenkamp

Kiel Working Papers from Kiel Institute for the World Economy

Abstract: We contribute to the nascent literature on the heterogeneity of multinational enterprises (MNEs) and the relevance of firm characteristics for analyzing the determinants of outward foreign direct investment (FDI). The focus is on the role of firm-level heterogeneity when MNEs decide on the share of ownership in foreign affiliates. We combine two firm-specific datasets on German MNEs with varying equity stakes in Indian affiliates. The impact of firm characteristics on ownership shares is assessed in the context of OLS and fractional logit models, controlling for industry and location characteristics. We show that the effect of several characteristics differs between the establishment of new affiliates by German MNEs and their engagement in already existing Indian firms. Most notably, the productivity of the German parents matters only for ownership shares in new affiliates

Keywords: climate change; financial crises; the world trading system; oil supplies; immigration (search for similar items in EconPapers)
JEL-codes: F23 L25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cwa and nep-dev
Date: 2008-11

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Persistent link: http://EconPapers.repec.org/RePEc:kie:kieliw:1462

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