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Performance Dissimilarities in the Activity of Foreign and Romanian-Owned Companies: What Lessons to be Learned?

Oana Popovici and Alexandra Horobeț

European Journal of Interdisciplinary Studies, 2018, issue 01

Abstract: Our paper addresses the activity of the foreign-capital controlled companies versus domestic companies in Romania, in order to highlight the differences in performance between the two categories of firms, given the increased importance of foreign-owned companies in the Romanian economy in recent years. The research and analysis are based on data available from Eurostat FATS - Foreign Affiliates Statistics. The comparative analysis of performance between foreign-owned and Romanian-owned companies is carried out for the period 2008-2014 on two levels: (i) The total performance of foreign-owned and Romanian-owned companies; (ii) The determination of the “average”-sized foreign-owned and Romanian-owned company attributes. Our main findings show that foreign-owned companies generate higher cash flows that are essential for business development, backed up by a higher value of production, higher turnover and higher gross operating profits, despite a higher number of employees and higher personnel costs compared to Romanian-owned companies. At the same time, Romanian-owned companies claim higher profitability ratios due to their reduced dimensions.

Keywords: performance; foreign-owned companies; Romanian-owned companies; foreign direct investment (search for similar items in EconPapers)
JEL-codes: F23 L25 O10 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:jis:ejistu:y:2018:i:01:id:418