Foreign influence, control, and indirect ownership: Implications for productivity spillovers
Sara L. McGaughey (),
Pascalis Raimondos () and
Lisbeth Cour ()
Additional contact information
Sara L. McGaughey: Griffith University
Lisbeth Cour: Copenhagen Business School
Journal of International Business Studies, 2020, vol. 51, issue 9, No 2, 1412 pages
Abstract How does the presence of ‘controlled’ foreign firms affect the productivity of domestic firms in the same industry? We revisit the historical distinction between control and influence by the foreign owner and define ‘controlled’ foreign firms as those with a foreign ultimate owner holding 50% or more of voting shares. Connecting insights from new internalization theory with knowledge-based views of the MNE, we posit that ‘controlled’ foreign firms will generate larger productivity spillovers than non-controlled foreign firms. We use a firm-level panel dataset of 575,844 manufacturing firms (2,343,495 observations) across 20 European countries to test our proposition. We pay careful attention to how firms are categorized as foreign, taking into account both direct and indirect ownership links. Allowing for indirect ownership turns out to be pivotal: there are just as many indirectly controlled foreign firms as foreign firms captured with direct ownership data. We find positive horizontal spillovers from controlled foreign firms and zero spillovers from non-controlled foreign firms. Interestingly, the strongest positive spillovers come from the indirectly controlled foreign firms. The implications of our study extend beyond productivity spillovers to areas such as cross-border M&As, joint ventures, MNE strategies of legitimation, and corporate groups.
Keywords: foreign direct investment; knowledge and productivity spillovers; ultimate owner; new internalization theory; paradox of control; history of FDI and the MNE (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1057/s41267-020-00350-w Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:51:y:2020:i:9:d:10.1057_s41267-020-00350-w
Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2
Access Statistics for this article
Journal of International Business Studies is currently edited by John Cantwell
More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().