Foreign influence, control, and indirect ownership: Implications for productivity spillovers

How does the presence of ‘controlled’ foreign firms affect the productivity of domestic firms in the same industry? We revisit the historical distinction between control and influence by the foreign owner and define ‘controlled’ foreign firms as those with a foreign ultimate owner holding 50% or mor...

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Veröffentlicht in:Journal of international business studies 2020-12, Vol.51 (9), p.1391-1412
Hauptverfasser: McGaughey, Sara L., Raimondos, Pascalis, la Cour, Lisbeth
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container_title Journal of international business studies
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creator McGaughey, Sara L.
Raimondos, Pascalis
la Cour, Lisbeth
description How does the presence of ‘controlled’ foreign firms affect the productivity of domestic firms in the same industry? We revisit the historical distinction between control and influence by the foreign owner and define ‘controlled’ foreign firms as those with a foreign ultimate owner holding 50% or more of voting shares. Connecting insights from new internalization theory with knowledge-based views of the MNE, we posit that ‘controlled’ foreign firms will generate larger productivity spillovers than non-controlled foreign firms. We use a firm-level panel dataset of 575,844 manufacturing firms (2,343,495 observations) across 20 European countries to test our proposition. We pay careful attention to how firms are categorized as foreign, taking into account both direct and indirect ownership links. Allowing for indirect ownership turns out to be pivotal: there are just as many indirectly controlled foreign firms as foreign firms captured with direct ownership data. We find positive horizontal spillovers from controlled foreign firms and zero spillovers from non-controlled foreign firms. Interestingly, the strongest positive spillovers come from the indirectly controlled foreign firms. The implications of our study extend beyond productivity spillovers to areas such as cross-border M & As, joint ventures, MNE strategies of legitimation, and corporate groups.
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source Worldwide Political Science Abstracts; SpringerNature Journals; JSTOR Archive Collection A-Z Listing
subjects Borders
Business and Management
Business ownership
Business Strategy/Leadership
Companies
Control
Foreign business
Foreign companies
Influence
Internalization
International Business
Joint ventures
Legitimation
Management
Manufacturing
Multinational corporations
Organization
Ownership
Productivity
Ventures
Voting
title Foreign influence, control, and indirect ownership: Implications for productivity spillovers
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