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Characterising Euro Area Multinationals

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  • Ingo Geishecker
  • Holger Görg
  • Daria Taglioni

Abstract

This study uses firm‐level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms’ productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over‐proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. Finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number.

Suggested Citation

  • Ingo Geishecker & Holger Görg & Daria Taglioni, 2009. "Characterising Euro Area Multinationals," The World Economy, Wiley Blackwell, vol. 32(1), pages 49-76, January.
    • Handle: RePEc:bla:worlde:v:32:y:2009:i:1:p:49-76
    DOI: 10.1111/j.1467-9701.2009.01157.x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Holger Görg & Henning Mühlen & Peter Nunnenkamp, 2010. "Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 65(3), pages 273-295, September.
    2. José C. Fariñas & Ana Martín-Marcos & Francisco J. Velázquez, 2021. "The Geographical Scope of Multinational Firms and Heterogeneity," Open Economies Review, Springer, vol. 32(4), pages 761-788, September.
    3. Holger Gorg & Henning Muhlen & Peter Nunnenkamp, 2010. "FDI Liberalisation, Firm Heterogeneity and Foreign Ownership: German Firm Decisions in Reforming India," Journal of Development Studies, Taylor & Francis Journals, vol. 46(8), pages 1367-1384.
    4. Driffield Nigel & Temouri Yama, 2014. "Inward Investment and the Drivers of Post Recession Recovery in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(6), pages 775-799, December.
    5. Karolien Lenaerts & Bruno Merlevede, 2018. "Indirect productivity effects from foreign direct investment and multinational firm heterogeneity," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 377-400, May.
    6. K. Lenaerts & B. Merlevede, 2014. "FDI Spillovers and Multinational Firm Heterogeneity," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/879, Ghent University, Faculty of Economics and Business Administration.
    7. Francesco Sandulli & José Fernández-Menéndez & Antonio Rodríguez-Duarte & José López-Sánchez, 2012. "The productivity payoff of information technology in multimarket SMEs," Small Business Economics, Springer, vol. 39(1), pages 99-117, July.
    8. Mainer-Casado, Carolina & Fariñas, José Carlos & Moreno, Lourdes, 2018. "The Scope, Scale and Locational Preferences of Spanish Multinationals," MPRA Paper 85766, University Library of Munich, Germany.
    9. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    10. Martin Falk & Yvonne Wolfmayr, 2009. "The Extent, Characteristics and Impacts of FDI and Multinational Firm Activities. A Firm Level Analysis," WIFO Studies, WIFO, number 41155.
    11. Pereira, Vijay & Budhwar, Pawan & Temouri, Yama & Malik, Ashish & Tarba, Shlomo, 2021. "Investigating Investments in agility strategies in overcoming the global financial crisis - The case of Indian IT/BPO offshoring firms," Journal of International Management, Elsevier, vol. 27(1).
    12. Iootty, Mariana & Correa, Paulo & Radas, Sonja & Skrinjaric, Bruno, 2014. "Stylized facts on productivity growth : evidence from firm-level data in Croatia," Policy Research Working Paper Series 6990, The World Bank.
    13. Fariñas, José C. & Martín-Marcos, Ana & Velázquez, Francisco J., 2019. "Estimating the Scope Elasticity of Multinational Firms: An Empirical Assessment," MPRA Paper 94990, University Library of Munich, Germany.

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