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Multinationals’ Productivity Advantage: Scale Or Technology?

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  • SOURAFEL GIRMA
  • HOLGER GÖRG

Abstract

This study decomposes the productivity advantage of foreign multinationals into a technology and a scale effect and analyses the causal relationship between foreign ownership and these two components. This is done by analyzing the effects of an acquisition of a domestic establishment by a foreign multinational, using a combined propensity score matching and difference‐in‐differences estimation. The main results show that any positive impact of acquisition is predominantly due to changes in technical efficiency and not in scale and that the preacquisition productivity of the target plays a role in mediating the rate of technology transfer from the multinational. (JEL F23, L22)

Suggested Citation

  • Sourafel Girma & Holger Görg, 2007. "Multinationals’ Productivity Advantage: Scale Or Technology?," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 350-362, April.
    • Handle: RePEc:bla:ecinqu:v:45:y:2007:i:2:p:350-362
    DOI: 10.1111/j.1465-7295.2006.00008.x
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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