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Assessing the impact of foreign ownership on firm performance by size: evidence from firms in developed and developing countries

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  • S. Selsah Pasal
  • Arslan Chaudhary

Abstract

Foreign direct investment (FDI) flows are frequently credited with a wide range of benefits for recipient economies. This research investigates the impact mechanics of FDI by mapping the extent to which firms are owned by foreigners against their performance. Firms in both developed and developing countries are included in the study and the performance indicators used are growth in sales, employment and labour productivity. Based on data from more than 80,000 firms during the period 2010 to 2019, this research is unique because it compares the performance of foreign-owned and domestic firms of different sizes. While the preliminary results show foreign ownership overall does give firms an edge on performance, there is no consistent evidence that this is so by firm size. However, across all developing regions, the study consistently finds that foreign ownership has a positive impact on the sales and productivity growth of micro-size firms. This calls for more research on and policy experimentation with outward-oriented and innovative start-ups.

Suggested Citation

  • S. Selsah Pasal & Arslan Chaudhary, . "Assessing the impact of foreign ownership on firm performance by size: evidence from firms in developed and developing countries," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    • Handle: RePEc:unc:tncjou:50
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    References listed on IDEAS

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    Cited by:

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    2. Mina Baliamoune‐Lutz & Mohamed A. K. Basuony & Stefan H. H. Lutz & Ehab K. A. Mohamed, 2024. "International ownership and SMEs in Middle Eastern and African economies," African Development Review, African Development Bank, vol. 36(2), pages 279-291, June.

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