Local firms may attract productivity spillovers from foreign investors, yet these vary with local firms' awareness, capability and motivation to react to foreign entry. In consequence, spillovers ...vary across countries at different levels of economic development. We apply competitive dynamics theory to analyze these contextual moderators of spillovers, and test hypotheses thus derived in a meta-analysis of the empirical literature on spillovers. Our analysis suggests a curvilinear relationship between spillovers and the host country's level of development in terms of income, institutional framework and human capital.
The enduring lack of diversity in the corporate elite continues to attract attention from scholars and practitioners. However, the issue of representation or ‘body count’ – in particular for women – ...tends to dominate the discussion and overshadows social-relational dimensions. Adopting a network perspective, this article investigates how gender and nationality interact with human and social capital (i.e. director capital), explaining why particular directors hold more influential positions in the corporate elite. Findings from Swiss data show that some specific aspects of human and social capital matter more than others for being an influential director and that, ceteris paribus, Swiss citizens benefit most from both sources of capital. The discussion engages with the implications of our findings on current approaches intended to increase the numbers of appointments of ‘diverse’ directors, and how these are expected to change the corporate elite and the related job market in the longer term.
Foreign Direct Investment (FDI) is expected to generate technology spillovers to indigenous firms in transition economies. This paper disentangles the positive effect of technology transfer on the ...productivity of domestic firms from that of competition. We use a production function framework to estimate the impact of technology transfer from FDI on the growth of sales of domestic firms in Estonia during the period from 1994 to 1999. Employing panel data techniques, we control for industry and firm specific effects and use a Heckman two-stage procedure to control for sample self-selection bias. We find that the magnitude of the spillover effect depends on the characteristics of incoming FDI and of the recipient local firm. More specifically, spillovers vary with the measure of foreign presence used and are influenced by the recipient firm's size, its ownership structure, and its trade orientation.
Journal of Comparative Economics
32 (3) (2004) 445–466.
Globalization has led to the decentralization of research and development (R&D) activities by multinational enterprises (MNEs). Investment in these activities is affected by both the host-country ...environment and the investment strategies of the entrant MNEs. Using data on greenfield R&D investment projects for a sample of digital MNEs in the communications, software and IT service industries during the period 2003-2019, we investigate the importance of host-country characteristics on MNEs' R&D investment and examine the moderating role of the host country's innovation capabilities as well as two strategies--exploitation versus exploration --on the part of MNEs. We And that the size of investment projects is larger in developing countries than in developed ones, especially when host countries have stronger innovation capabilities and when MNEs pursue strategies of exploitation rather than exploration. Our findings contribute to the extant research in this area and furnish related policy implications for developing countries.
In this article we investigate the importance of sunk costs, firm characteristics and spillovers from nearby exporters on a firm's decision to participate in exporting. The empirical analysis ...involves the estimation of a nonstructural, discrete choice, dynamic model with firm heterogeneity. By using panel data for Estonian companies from 1994 to 1999 we find that: (i) both sunk costs and observable firm characteristics are important determinants of export market participation; (ii) previous history matters, in that, if a firm has been exporting the previous period or the period before, it significantly increases the likelihood of the firm exporting in the current period; (iii) larger firms with high capital intensity and foreign ownership are more likely to be exporters; (iv) operating in an export-oriented industry increases a firm's likelihood of exporting.
This paper investigates the relationship between ownership concentration and market value of European banks, and the role of the institutional environment in shaping this relationship. Using GMM ...dynamic estimator on a sample of European banks over a 13-year period (1993–2005) we find on average a negative effect of ownership concentration on bank value, measured by Tobin's Q. However, this effect varies across different institutional settings; while higher ownership concentration results in a lower bank value particularly in the countries belonging to German legal family, the impact of ownership concentration is positive in Scandinavia. We propose that, besides the legal protection of small investors, the differences in the impact of ownership concentration across the countries could be due to the identity of the predominant owners, i.e. financial institutions in Germany and trusts and foundations in Scandinavia. This in turn implies that restrictions of shareholdings in banks could alleviate governance problems in some countries, but lower bank valuation in others.
The purpose of this paper is to analyse the determinants of global expansion strategies of newcomer Multinational Corporations (MNCs) by focusing on Iceland, Israel and Ireland. We argue that ...newcomer MNCs from small open economies pursue complex global expansion strategies (CGES). We distinguish four different types of global expansion strategies, namely, horizontal, vertical, lateral integration, and risk diversification. Building upon the traditions of Caves and Dunning and applying a multinomial logistic approach, we model CGES as a function of firm and country specific factors. The empirical evidence suggests that newcomer MNCs move away from simplistic dualities in the formulation of their strategic choices towards more complex options as a means of maintaining and enhancing their global competitiveness.
This paper investigates how different types of owners influence the extent of firm internationalization, measured by the share of firm exports in total sales. The results of the analysis carried out ...using firm level data of Estonian and Slovenian firms, show that the firms under the control of the insider owners are, on average, more internationalized. State control, on the other hand, hampers internationalization efforts. Further, more productive firms, larger firms, more capital-intensive firms and those with high level of investment in both fixed capital and R&D are more successful in internationalization process. Finally, high market share also leads to increased internationalization through exports as firms seek to expand in foreign markets after having dominated the domestic ones.
This article addresses the role of formal institutions and informal networks on corporate governance practices. The existing corporate governance literature has mostly examined the formal ...institutions, such as the effect of legal systems. Our contribution is to consider the effect of informal ‘small world’ characteristics of ownership and board networks. We use the case of Scandinavia (Denmark, Norway and Sweden) to examine these effects. Our empirical results reveal large differences in formal board and ownership structures between the Scandinavian countries, but strong similarities in terms of law enforcement, political stability, government effectiveness, rule of law, control of corruption as well as voice and accountability. We find that all three countries can be characterized as ‘small worlds' in which trust, information diffusion and reputation mechanisms are active governance mechanisms.
This paper contributes to the literature on corporate governance by providing evidence on the importance of owner identity on technology transfer from foreign firms. To this end we use a panel of ...Estonian firms for 1993-2002 and employ panel data techniques to avoid endogeneity and sample selection bias. We find that across different ownership groups only domestic outsiders benefit from spillovers of technology transfer. However, a large technology gap with foreign firms motivates all local firms to use their existing technology more efficiently and as such successfully cope with the increased open market competition. Furthermore, because of rent seeking and/or asset striping behavior insider owned firms, face financial constraints, and as such cannot invest in new technology as much as domestic outsider owned firms.
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