Foreign ownership and productivity

Authors

Jian Xu, The University of Texas Rio Grande ValleyFollow
Yu Liu, The University of Texas Rio Grande Valley
Hussein Abdoh

Document Type

Article

Publication Date

7-2022

Abstract

This study examines the impact of foreign ownership on firm productivity in private firms, employing the World Bank Enterprise Survey (WBES) dataset, which includes over 120, 000 firms from 139 countries. We find strong and robust evidence that foreign ownership is positively related to firm productivity. We then explore possible channels through which foreign ownership could impact firm productivity. Firms with foreign ownership are more likely to engage in innovation, telecommunication, and labor cost reduction, and less likely to face financial constraints. Moreover, the foreign-productivity relationship is more pronounced in medium/large firms than in small firms. Countries with medium institutional development or collectivistic countries stand to benefit more from foreign investment than countries with either low or high institutional development or individualistic countries do.

Comments

Original published version available at https://doi.org/10.1016/j.iref.2022.02.079

Recommended Citation

Xu, Jian, Yu Liu, and Hussein Abdoh. "Foreign ownership and productivity." International Review of Economics & Finance 80 (2022): 624-642. https://doi.org/10.1016/j.iref.2022.02.079

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

International Review of Economics & Finance

DOI

10.1016/j.iref.2022.02.079