Home Firm Performance After Foreign Investments and Divestitures

Engel, Dirk; Procher, Vivien

doi:10.1111/twec.12068

Cited by 17 publications

(1 citation statement)

References 45 publications

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“…In case of industry level studies and firm level studies there is some consensus in their results obtained. Most of the studies have found a complementary relationship (Kim, 2000;Head and Ries, 2001;Lim and Moon, 2001;Lipsey and Ramstetter, 2003;Chow, 2012;Kang, 2012;Engel and Procher, 2013). The number of industries with complementary relationship is more than the negative ones (Forte and Silva, 2017).…”

Section: Impact Of Outward Fdi On Home Country Exportsmentioning

confidence: 99%

Impact of outward FDI on home country exports

Bhasin

Kapoor

2020

IJOEM

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PurposeThe relationship of outward foreign direct investment (OFDI) with home country's exports has significant implications for policymakers as well as business managers of MNEs. Since BRICS nations have emerged as important sources as well as destinations of FDI, this paper aims to study the impact of OFDI from these countries on home country exports by using panel data for BRICS for time period 1993–2015.Design/methodology/approachThe author use panel unit root tests, panel cointegration, VECM and causality tests in the study.FindingsThe results reveal that OFDI has a negative and significant impact on home country exports indicating that outward FDI is a substitute for exports in these countries. It also indicates long-run causality from exports towards OFDI. There is no long-run causality running from OFDI to exports, suggesting that MNEs do not “connect” with home economies' firms through forward and backward linkages in value chain.Practical implicationsFrom the point of view of policymakers, it implies a net outflow of capital as the outflow of foreign investment would not be matched by any incremental export earnings since exports are getting substituted by production abroad. For business managers, it is indicative of a growing foreign market that warrants large scale production and justifies the high cost and risk involved in FDI as a mode of entry compared to exports.Originality/valueTo the best of authors' knowledge, this is the first attempt to deal with the relationship between home country exports and OFDI, for an important group of emerging market economies, i.e. BRICS. The understanding of this relationship allow us to identify whether factors contributing to OFDI from emerging economies are “tied” to their home economies thereby making exports necessary or are rather based on firm specific competencies which are leveraged in different locations to cater to expanding markets.

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Section: Impact Of Outward Fdi On Home Country Exportsmentioning

confidence: 99%

Impact of outward FDI on home country exports

Bhasin

Kapoor

2020

IJOEM

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In or Out: How Insourcing Foreign Input Production Affects Domestic Production

2017

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When a firm imports inputs from foreign countries, the management faces two options: buying from unaffiliated firms or insourcing the foreign production. This paper suggests that this decision directly affects domestic production because international insourcing affects the operational flexibility and the firms' opportunities for accessing knowledge and capabilities developed abroad. Empirical results based on firm-level data of Swiss firms confirm this hypothesis. Concretely, the insourcing of international production increases domestic productivity, decreases (at least in the short run) domestic employment and possibly investments. In line with transaction cost literature, we observe that contractual hazards moderate these effects.

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Benefitting from Investment Abroad? Evidence from Indian Manufacturing

Chawla

2022

Asia and the Global Economy

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Home Firm Performance After Foreign Investments and Divestitures

Cited by 17 publications

References 45 publications

Impact of outward FDI on home country exports

Impact of outward FDI on home country exports

In or Out: How Insourcing Foreign Input Production Affects Domestic Production

Benefitting from Investment Abroad? Evidence from Indian Manufacturing

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