Ownership Structure and Productivity of Multinationals

Çağatay Bircan

Journal of International Economics, 2019, vol. 116, issue C, 125-143

Abstract: We examine the ownership structure and productivity of multinational affiliates and their effects on domestic industry. We first separate plant-level efficiency into a physical productivity and a price component. Multinationals target plants with high prices and markups. Upon acquisition they raise physical productivity but lower prices, leaving markups unchanged, especially when they are majority owners. This pro-competitive effect means that multinationals' productivity effects may be previously under-estimated. Multinational presence in an industry increases physical productivity while lowering prices at domestic firms, especially when majority-owned affiliates are present. Ownership structure and foreign acquisitions therefore play an important role in driving aggregate productivity growth.

Keywords: Productivity; Acquisitions; Ownership structure; Foreign direct investment (search for similar items in EconPapers)
JEL-codes: D23 F23 L23 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:116:y:2019:i:c:p:125-143

DOI: 10.1016/j.jinteco.2018.11.005

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