Characterising Relative Performance: The Productivity Advantage of Foreign Owned Firms in the Uk

Davies, Stephen; Lyons, Bruce

doi:10.1093/oxfordjournals.oep.a042018

Cited by 93 publications

(58 citation statements)

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“…Apart from the existence of such advantages, there are additional factors, most of them are closely related to or deriving from the fact of multinationality. This is for example established by Davies and Lyons (1991) in a decomposition of a productivity gap of 20 percent into a "structural" and an "ownership" effect. The gap is persistent on different levels of aggregation, i.e.…”

Section: Urgxfwlylw\ *Dsvmentioning

confidence: 93%

“…Pratten, 1976;Davies and Lyons, 1991;Maliranta, 1997;Moden, 1998;Howenstine and Zeile, 1992;Oulton, 1998a, b;Ylä-Anttila and Ali-Yrkkö, 1997;Doms and Jensen, 1998;Griffith, 1999a, b;Harris, 2002;Harris andRobinson, 2001, 2002;De Backer, 2002;Huskel et al 2002;Conyon et al 2002a;Girma et al, 2001). Besides ownership factors, a first additional source of productivity gaps are differentials in the mix of activities undertaken by FO firms and DO firms (Globerman et al, 1994).…”

Section: Urgxfwlylw\ *Dsvmentioning

confidence: 99%

“…Most factors are related to multinationality. Such issues have been termed "best practice model" vs. "random model" by Davies and Lyons (1991). The latter suggests that firmspecific advantages may be randomly distributed, i.e.…”

Section: Urgxfwlylw\ *Dsvmentioning

confidence: 99%

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How Domestic and Foreign Firms Differ and Why Does it Matter?

Bellak

2004

Journal of Economic Surveys

163

116

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. This paper reviews and summarises the results of selected studies on performance gaps between multinational enterprises and their domestic counterparts. Performance gaps arise in such fields as productivity, technology, profitability, wages, skills and growth. While these gaps are often attributed to foreign ownership of the affiliates, the theory of the Multinational Enterprise argues that these gaps are due to being a Multinational rather than the nationality of the firm. Empirical evidence on the existence of performance gaps between foreign and domestic firms is supportive of this view: foreign ownership turns out to be a much less important explanatory factor than normally assumed. Firm‐specific assets and firm characteristics like industry, size, parent country and multinationality per se are more important. Such results are broadly consistent with those derived in the literatures on ownership change, on foreign entry and on spillovers. We conclude that there is little case for foreign direct investment promotion policies to discriminate between firms on the basis of ownership.

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Section: Urgxfwlylw\ *Dsvmentioning

confidence: 93%

Section: Urgxfwlylw\ *Dsvmentioning

confidence: 99%

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How Domestic and Foreign Firms Differ and Why Does it Matter?

Bellak

2004

Journal of Economic Surveys

163

116

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“…Therefore, in order to compare like with like we need to compare US MNEs with 1 see for example O'Mahony and de Boer (2002). 2 For the UK: Griffith (1999), Griffith and Simpson (2001), Oulton (2000) and Harris (1999) using the ARD; Conyon et al (2002) using firm level data; Davies and Lyons (1991) using industry level data. The study by Doms and Jensen (1998) for the US.…”

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confidence: 99%

Multinationals and U.S. Productivity Leadership: Evidence from Great Britain

Criscuolo¹,

Martin²

2009

Review of Economics and Statistics

148

125

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We study the productivity of US owned plants in the UK. Using a new dataset that identifies foreign and domestic MNEs, we find that UK MNEs are less productive than US affiliates, but as productive as non US foreign affiliates. We investigate the source of the US and MNE advantage. We find evidence confirming that the MNE advantage is driven by sharing superior firm level assets across plants and by cherry picking the better plants in a country. The additional superiority of US firms seems entirely driven by their particular ability to takeover the best British plants. Thirdly, the study features a novel approach to TFP calculation. JEL Classification: F230, L600

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“…While these firm specific assets were characterised by Dunning as encompassing a number of phenomena, including patents, managerial ability, access to finance, the ability to coordinate resources or supply chains internationally, and greater influence in both goods and factor markets, these are often characterised purely in terms of technological advantage. This is either because the focus of the researcher is on technology or productivity differences between firms (Davies and Lyons 1991, Cantwell, 1989, 1991, but perhaps more often because rather erroneously the researcher has focussed on this element of O advantage to the exclusion of all other types of O advantages as has been the case in the spillovers literature. The literature has therefore over-relied on the issue of technological advantage, and has therefore in turn sought evidence of technology transfer between inward investors and host country producers, as the only evidence of the beneficial effects of inward investment.…”

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confidence: 99%

Does FDI Cause Development? The Ambiguity of the Evidence and Why it Matters

Narula

Driffield

2011

Eur J Dev Res

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The contribution that inward FDI makes to development has been examined in a number of contexts including the relationship between inward FDI and new firm formation; growth; innovation, exports and competitiveness. However, no debate has proved so contentious, or so long lasting as that concerning the extent to which inward FDI stimulates productivity growth in the host country. There are two reasons for this. The first is simply the importance of the question. The growth literature is consistent in identifying productivity growth as the main driver of development. Studies by Klenow and Rodriguez-Clare (1997), Hall and Jones (1999) and Easterly and Levine (2001) among others have demonstrated that total factor productivity growth explains far more of the variation in cross country per capita income growth than the more traditional drivers of growth such as institutions or capital (physical and human) accumulation. Secondly, both policy makers and academics have long since held the view that there exist "spillovers" from FDI. That is, inward investment generates some form of indirect knowledge or technology transfer from parent to affiliate, and subsequently from affiliate to the local economy (Driffield et al 2010). The big questions that form the basis of this debate forum are simple enough: Do MNEs cause net positive externalities to host countries or not?Why is the empirical evidence on the role of FDI in development so ambiguous, especially for the developing countries? Given the vigour and universality with which FDI (circa 2012) is considered to be a 'good thing', central to the economic development plans of almost all developing countries, an outsider may be forgiven for thinking that these questions should by now have unequivocally positive answers. However, these are not innocuous questions that trouble only a few specialists in the field interested in the arcane minutiae of theory, as this debate forum intends to illustrate.The importance placed by nation states on attracting FDI borders on the obsessive. FDI is seen by most countries as an elixir: a source of management techniques, technologies, best practice in governance, capital, etc. There are a variety of investment promotion agencies seeking to attract multinational enterprises (MNEs) to particular locations through myriad systems of incentives.Supranational and international agencies (from the OECD and the UN to the WTO and the EU), donor countries and NGOs offer guidelines, training programmes, advice, how-to manuals and assistance on how to negotiate, attract and embed MNEs. International agreements (some non-binding and others binding) on FDI and MNEs are attached to almost every bilateral and multilateral initiative.1 Henley Business School, University of Reading, RG6 AA, UK 2 Aston Business School, Aston University, B4 7ET, UK It has not always been so.Less than 40 years ago, MNEs were seen as the sharp and unpleasant edge of capitalism and neocolonialism, the cause of persistent underdevelopment, capital shortages and a threat to politica...

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Characterising Relative Performance: The Productivity Advantage of Foreign Owned Firms in the Uk

Cited by 93 publications

References 2 publications

How Domestic and Foreign Firms Differ and Why Does it Matter?

How Domestic and Foreign Firms Differ and Why Does it Matter?

Multinationals and U.S. Productivity Leadership: Evidence from Great Britain

Does FDI Cause Development? The Ambiguity of the Evidence and Why it Matters

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