Multinationals Here and There: Affiliates' Response to Global Crises

Constance Marette, Camilo Umana Dajud and Vincent Vicard

Working Papers from CEPII research center

Abstract: This paper investigates how multinational enterprises (MNEs) adapted their global operations in the post COVID-19 period. Using the pandemic as a natural experiment, we analyze how MNEs adjusted employment across their foreign and domestic affiliates in response to economic disruptions and shifting perceptions. Leveraging a crosscountry, firm-level dataset, we employ a difference-in-differences approach among treated groups to assess the causal differential response of MNEs relative to domestic firms. MNEs outperformed domestic firms following the pandemic, driven primarily by the stronger performance of their domestic affiliates. We also find evidence of home bias in adjustments within MNEs: employment growth was significantly higher in domestic affiliates than in foreign ones. These patterns intensified through 2022, suggesting persistent shifts in MNE strategies.

Keywords: Multinational enterprises; COVID-19 crisis; Globalization; Reshoring; Establishment response; Affiliates' network; Foreign ownership (search for similar items in EconPapers)
JEL-codes: F23 F61 L22 (search for similar items in EconPapers)
Date: 2025-07
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2025-10

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