Foreign ownership and productivity

Jian Xu, Yu Liu and Hussein Abdoh

International Review of Economics & Finance, 2022, vol. 80, issue C, 624-642

Abstract: This study examines the impact of foreign ownership on firm productivity in private firms, employing the World Bank Enterprise Survey (WBES) dataset, which includes over 120, 000 firms from 139 countries. We find strong and robust evidence that foreign ownership is positively related to firm productivity. We then explore possible channels through which foreign ownership could impact firm productivity. Firms with foreign ownership are more likely to engage in innovation, telecommunication, and labor cost reduction, and less likely to face financial constraints. Moreover, the foreign-productivity relationship is more pronounced in medium/large firms than in small firms. Countries with medium institutional development or collectivistic countries stand to benefit more from foreign investment than countries with either low or high institutional development or individualistic countries do.

Keywords: Foreign ownership; Firm productivity; Private firms; Institution; Culture (search for similar items in EconPapers)
JEL-codes: G21 G30 K40 O16 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:624-642

DOI: 10.1016/j.iref.2022.02.079

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