Productivity Effects of Foreign Acquisitions in Swedish Manufacturing: The FDI Productivity Issue Revisited

International Journal of the Economics of Business, 2007, vol. 14, issue 2, 241-260

Abstract: This study analyzes the difference between foreign and domestic ownership of firms with respect to productivity. Recent literature has shown that it is important to study the counter-factual 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 casual effects due to a takeover a propensity score matching estimator is applied to compare similar treated and untreated firms. The difference-in-difference estimations show that there is a positive effect of foreign acquisition on productivity. Foreign acquisitions increase the productivity in the acquired Swedish firms by between 3 and 11% depending on the estimator chosen. Moreover, this productivity difference does not occur immediately but starts between 1-5 years post acquisition.

Keywords: Multinational firms; Foreign acquisitions; Productivity; Matching; Difference-in-difference (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (32)

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DOI: 10.1080/13571510701344038

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