Mobility Barriers and Profitability of Multinational and Local Enterprises in Indian Manufacturing

Nagesh Kumar ()

Journal of Industrial Economics, 1990, vol. 38, issue 4, 449-63

Abstract: This paper examines the determinants of profit margins of affiliates of multinational enterprises and local firms in forty-three Indian manufacturing industries to seek explanations of the superior performance of the former. The empirical analysis finds support for the proposition that multinational enterprises and local firms constitute different strategic groups in an industry and that the former as a group enjoys greater protection from mobility barriers. Multinational enterprises appear to enjoy persistent advantage over their local counterparts especially in knowledge (both technology and human skill) intensive industries. Residual ability differences are not statistically significant in explaining profitability differences between multinational enterprises and local firms. Copyright 1990 by Blackwell Publishing Ltd.

Date: 1990
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