Why are Multinationals “Footloose”?

Tomohiko Inui, Richard Kneller, Toshiyuki Matsuura and Danny McGowan

Discussion Papers from University of Nottingham, GEP

Abstract: This paper investigates why multinational ownership is found to increase the probability that a plant will exit. It does so by using Japanese plant data linked to firm data. Plants belonging to a multinational are 9 percentage points more likely to exit when plant, firm and industry characteristics are conditioned on. We find that the “footloose” effect is attributable to multinationals closing their weakest plants. Plants that are small, capital un-intensive and have low input intensities relative to the firm are more vulnerable to closure within multinationals. We also find a strong similarity between the plants that are shut by multiplant firms regardless of whether they have overseas affiliates or not.

Keywords: Multinational Firms; Multiplant Firms; Exit; International Trade (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:09/27

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