Foreign ownership and productivity

Jian Xu, Yu Liu, Hussein Abdoh

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)624-642
Number of pages19
JournalInternational Review of Economics and Finance
Volume80
DOIs
Publication statusPublished - Jul 2022
Externally publishedYes

Keywords

  • Culture
  • Firm productivity
  • Foreign ownership
  • Institution
  • Private firms

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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