Foreign acquisitions – A shortcut to higher productivity and expansion in smaller firms? (original) (raw)
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Foreign acquisition and employment effects in Swedish manufacturing
2007
This paper investigates the employment effects of foreign acquisitions in acquired firms in Swedish manufacturing during the 1990s, a period characterized by a dramatic increase in foreign ownership. To handle likely endogeneity problems, we evaluate the effects of foreign acquisitions on the targeted firms' employment by combining propensity score matching with difference-indifference estimation. We find some evidence of positive employment effects in firms taken over by foreigners and it seems that the employment of skilled labor increases more than the employment of less-skilled labor. Moreover, we examine whether the employment impact of foreign ownership differs between takeovers of Swedish MNEs and non-MNEs. Our results indicate that the positive employment effects only appear in acquired non-MNEs. Furthermore, we observe shifts in skill intensities toward higher shares of skilled labor in non-MNEs taken over by foreign MNEs but not in acquired Swedish MNEs.
Foreign Acquisition and Employment Effect in Swedish Manufacturing
2007
Sweden has witnessed a dramatic increase of inward FDI during the 1990's that has no correspondence in earlier years. This development has raised many questions on the effects on pro competitive effects, the labor market and welfare issues. This study analyzes the effects on labor demand in firms acquired by foreign investors. Recent literature has shown that it is important to study the counterfactual outcome, i.e. what would the outcome be had the domestic firm never been acquired? The analysis is based on a panel of Swedish firm level data. In order to isolate the causal effects due to a takeover a propensity score matching estimator is applied to compare similar treated and untreated firms. The difference-indifference estimations with firm fixed effect show that there is a positive effect of foreign acquisition on total employment. Separating between skilled and unskilled labor the effect of foreign acquisition on the former seems to bee more pronounced. Moreover, this effect seems to occur immediately on skilled labor but starts between 3-4 years post acquisition on unskilled labor. Finally, we control for previous international experience. Our findings suggest that the effect on the labor demand is only in domestic non-MNEs acquired by foreign investors, suggesting that domestic MNEs already are very similar to foreign MNEs.
SSRN Electronic Journal, 2000
Foreign direct investment is claimed to positively a¤ect …rms in the host country through a number of growth-enhancing e¤ects, generally termed "productivity spillovers." However, the empirical evidence for developing economies is quite controversial. This paper investigates the impact of foreign acquisition on the performances of a sample of Slovenian manufacturing …rms subject to takeover in 1997. The "propensity scorematching" estimation technique, also combined with the "di¤erence-in-di¤erences" approach, is used with the purpose of controlling for the potential bias arising from the nonrandom selection of acquired …rms. Our analysis con…rms that foreign investors acquire only the most productive …rms, while …nds no convincing evidence that the performances of such …rms improve in the post-acquisition period as a result of foreign acquisition.
Employment effects of foreign acquisition
International Review of Economics & Finance, 2011
This paper investigates the employment effects of foreign acquisitions in acquired firms in Swedish manufacturing during the 1990s; a period characterized by a dramatic increase in foreign ownership. We find some evidence of positive employment effects in acquired firms and it seems that the employment of skilled labor increases more than that of less-skilled labor.
Are foreign owned firms more productive? Evidence from Swedish firm data
This paper analyzes the difference between foreign and domestic ownership of firms with respect to productivity. The analysis is performed using a panel of firm data from Statis- tics Sweden, covering the entire manufacturing sector in the 1990:s. First we show that, other things equal, foreign-owned firms have higher labor productivity as well as total factor productivity than domestic firms. We also find that Swedish multinational firms are as productive as foreign-owned firms. Then we show that the rate of growth in productivity is higher in foreign-owned firms. We find no evidence for reverse causality.
Do Foreign Mergers & Acquisitions Boost Firm Productivity ? 1
2009
This paper examines the causal relationship between foreign mergers and acquisitions and firm productivity in the UK over the period 1999-2007. Our results raise questions about the existence of aggregate effects of foreign ownership on TFP in the longer-run. However, we find significant heterogeneity in the TFP effects of foreign M&A at the industry level. Overall, we uncover a systematic pattern of post-acquisition TFP effects that is consistent with the most recent theoretical models of firm heterogeneity and cross-border mergers and acquisitions as mode of foreign entry. Furthermore, we find positive aggregate effects on labor productivity due to capital deepening but not due to changes in TFP.
Foreign Acquisitions, Domestic Multinationals, and R&D
2011
The aim of this paper is to evaluate the causal effect of foreign acquisition on R&D intensity in targeted domestic firms. We are able to distinguish domestic multinationals and non-multinationals, which allows us to investigate the fear that the change in ownership of domestic to foreign multinationals leads to a reduction in R&D activity in the country, as headquarter activities are relocated to the new owner's home country. We use unique and rich firm level data for the Swedish manufacturing sector and different micro-econometric estimation strategies in order to control for the potential endogeneity of the acquisition dummy. Overall, our results give no support to the fears that foreign acquisition of domestic firms lead to a brain drain of R&D activity in Swedish MNEs. Rather, this paper finds robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non-MNEs.
Foreign Acquisitions, Domestic Multinationals, and R&D
Social Science Research Network, 2010
The aim of this paper is to evaluate the causal effect of foreign acquisition on R&D intensity in targeted domestic firms. We are able to distinguish domestic multinationals and non-multinationals, which allows us to investigate the fear that the change in ownership of domestic to foreign multinationals leads to a reduction in R&D activity in the country, as headquarter activities are relocated to the new owner's home country. We use unique and rich firm level data for the Swedish manufacturing sector and different micro-econometric estimation strategies in order to control for the potential endogeneity of the acquisition dummy. Overall, our results give no support to the fears that foreign acquisition of domestic firms lead to a brain drain of R&D activity in Swedish MNEs. Rather, this paper finds robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non-MNEs.
Foreign Acquisition and Firm Productivity: Evidence from Slovenia
World Economy, 2008
This paper investigates the impact of foreign acquisition on the productivity of Slovenian manufacturing firms subject to takeover in 1997. It finds evidence that foreign investors acquire those enterprises with higher productivity, that are more inclined to export and that ...
Do Foreign Mergers & Acquisitions Boost Firm Productivity?
2009
This paper examines the causal relationship between foreign mergers and acquisitions and firm productivity in the UK over the period 1999-2007. Our results raise questions about the existence of aggregate effects of foreign ownership on TFP in the longer-run. However, we find significant heterogeneity in the TFP effects of foreign M&A at the industry level. Overall, we uncover a systematic