The performance of foreign affiliates in German manufacturing: evidence from a new database

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis study presents the first investigation into the performance of foreign-controlled enterprises in German manufacturing based on new micro-data from official statistics. A comprehensive set of performance variables was examined not only by comparing unconditional mean values but also by accounting for other determinants and differences across distributions. The analysis revealed a foreign ownership performance premium with regard to productivity, R&D and export intensities, and average wages. Only profitability did not seem to differ from German-owned enterprises. Results were verified by varying comparison groups of indigenous firms and separating for high-and low-tech sectors. Furthermore, a breakdown by country of origin and type of ownership showed considerable heterogeneity of foreign-controlled affiliates in Germany.

Ownership Concentration and Performance Recovery Patterns in the European Union

“…In this framework, ownership advantages refer to tangible and intangible assets of the firm and materialize in the company's ability to transfer them over the border as part of the multinational company's operations [49]. Moreover, these advantages may be the benefit of being part of a network of affiliates, but, in all cases, the industry in which the company operates, its size, parent country and multinationality level mitigate the relationship between foreign ownership and the performance gap between locally-versus foreign-owned companies [50,51]. Empirical research on the relationship between foreign ownership and firm competitiveness and performance (measured by labor productivity, wages, profitability etc.)…”

Foreign direct investment productivity premium and foreign affiliates' heterogeneity: A comparison between advanced and emerging market overseas investments in the EU

“…For the US, Chen () shows that firms owned by advanced market multinationals (AFOFs) experience an increase in labour productivity of up to 13% compared with domestically owned firms, while firms owned by emerging market multinational enterprises (EFOFs) experience 23% lower labour productivity gains than domestically owned firms. By breaking down all FOFs according to the origin country (US, European countries and other extra‐European countries), Weche Gelübcke () finds that within the population of foreign firms, US affiliates in Germany stand out as having the highest productivity.…”

Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany

“…Second, foreign‐owned firms might be less credit constrained due to financial assistance from their parent companies, and this might help to finance trade costs at the extensive margins. Third, foreign‐owned firms are known to invest more in research and development and to be more innovative (for Germany, see Guadalupe et al., ; Weche Gelübcke ), and both innovative products and improved production processes will be positively linked with the extensive margins of exports.…”

“…The challenge here is to separate the role of foreign ownership from that of productivity and other observed firm characteristics like firm size and industry affiliation. As Weche Gelübcke () reports, compared to firms that are controlled by German owners, foreign‐owned firms in Germany are on average larger and more productive, and they are more often (and to a higher degree) involved in exports. Hence productivity and foreign ownership are likely to be intertwined.…”