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(Why) do Foreign-owned Firms in Germany Achieve Above-average Productivity?

In: Foreign-owned Firms

Author

Listed:
  • Lutz Bellmann
  • Rolf Jungnickel

Abstract

The aim of this chapter is to analyse whether productivity differentials between industrial firms can be explained by foreign ownership. The question if and why foreign-owned firms (FOFs) achieve higher productivity than indigenous firms is less ambitious compared with the aim of numerous studies that try to assess the effect of inward foreign direct investment (FDI) on the domestic economy. It is, nonetheless, highly relevant for economic policy. Labour productivity is a key factor for the development of the labour market. It determines both the volume of labour input and the income potential. If FOFs were more productive than indigenous firms, one could assume that more FDI would increase the domestic income level.1 The effect on the demand for labour is less clear: the demand for labour would be expected to fall to the extent to which the growth of hourly productivity exceeds that of production. In this case, without a reduction in working hours the manpower requirements would decrease. On the other hand, increased productivity can mean improved competitiveness and thereby open up new employment opportunities. To explain the development of productivity is therefore one of the central tasks of labour market research. The question why differences in productivity may exist is of interest since if FOFs have above-average productivity, this is not necessarily because of differing behaviour.

Suggested Citation

  • Lutz Bellmann & Rolf Jungnickel, 2002. "(Why) do Foreign-owned Firms in Germany Achieve Above-average Productivity?," Palgrave Macmillan Books, in: Rolf Jungnickel (ed.), Foreign-owned Firms, chapter 3, pages 58-88, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-50343-4_3
    DOI: 10.1057/9780230503434_3
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    Citations

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    Cited by:

    1. 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.
    2. Yama Temouri & Nigel L. Driffield & Dolores Añón Higón, 2008. "Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(1), pages 32-54, April.
    3. Johansson, Börje & Lööf, Hans & Rader Olsson, Amy, 2005. "Firm Location, Corporate Structure, R&D Investment, Innovation and Productivity," Working Paper Series in Economics and Institutions of Innovation 31, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    4. Uwe Jirjahn & Steffen Mueller, 2014. "Non-union worker representation, foreign owners, and the performance of establishments," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 140-163, January.
    5. Giorgio Barba Navaretti & Davide Castellani, 2003. "Investments Abroad and Performance at Home Evidence from Italian Multinationals," Development Working Papers 180, Centro Studi Luca d'Agliano, University of Milano.

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