Why Foreign Ownership May Be Good for You*

Egger, Hartmut; Kreickemeier, Udo

doi:10.1111/iere.12011

Cited by 44 publications

(40 citation statements)

References 52 publications

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“…The paper thus contributes to the literature by providing a single mechanism that is apt to explain di↵erent empirical phenomena that have been separately analyzed in the literature so far (Irarrazabal et al, 2013;Keller and Yeaple, 2013, for analyses of gravity; e.g. Egger and Kreickemeier, 2013;Malchow-Møller et al, 2013, for analyses of MNE wage premiums).…”

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confidence: 99%

The Organization of Knowledge in Multinational Firms

Gumpert

2018

Journal of the European Economic Association

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractEmployees must learn about firm technologies to use them in production. Within multinational firms, knowledge can be acquired centrally, by managers at headquarters, or locally, by production workers. Local knowledge acquisition increases with the bilateral communication costs with central management, and decreases with local knowledge acquisition costs. This mechanism explains why multinationals foreign sales and their probability of entry decrease in the distance of a country from the multinationals home country, and why multinationals pay higher wages than comparable domestic firms. The selection into foreign destinations and the foreign productivity distribution of German multinationals are consistent with the models predictions.

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confidence: 99%

The Organization of Knowledge in Multinational Firms

Gumpert

2018

Journal of the European Economic Association

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“…According to their results, wages in German plants should increase if the acquiring firm has higher profits than its target. Egger and Kreickemeier () additionally shows that international rent sharing can rationalise evidence on residual wage premia in the context of North–South investment.…”

Section: Resultsmentioning

confidence: 99%

Reassessing the foreign ownership wage premium in Germany

2020

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This paper evaluates the effect of foreign takeover on wages of workers in German establishments, using rich linked employer–employee data from 2003 to 2014. To identify a causal effect of foreign takeover, we combine propensity‐score matching with a difference‐in‐difference estimator. We find that a takeover by a foreign investor leads to a wage premium of 4.0 log points in the year after ownership change, which further increases to 6.3 log points 3 years after acquisition. The wage premium is largest for high‐skilled workers, which is consistent with three theoretical arguments, namely rent appropriation by managers, technology protection and training on new technology. We also show that the wage premium does not pick up an exporter effect due to a platform investment of the foreign owner, that it takes about 4 years before it fully develops, that it does not vanish after foreign divestment and that the wage increase is specific to foreign acquisition instead of ownership change per se.

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“…For instance, the structure of wages paid by firms in integrated or non-integrated units may be different, e.g. Egger and Kreickemeier (2011). In addition, in models featuring Nash-bargaining, such as the one considered in this paper, the choice of organisation is likely to affect firms' mark-up, and ultimately consumers' welfare.…”

Section: Resultsmentioning

confidence: 99%

Productivity, relationship-specific inputs and the sourcing modes of multinationals

Defever

Toubal

2013

Journal of Economic Behavior & Organization

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This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent AbstractWe investigate the roles of productivity and the specificity of inputs for the international sourcing strategy of firms which are part of a multinational network. We present a framework in which firms decide to import from a foreign independent supplier or from their related party abroad according to these two dimensions. We use a detailed survey that provides a detailed geographical breakdown of French firms' imports at the product level as well as the sourcing mode used for each transaction. The dataset also provides information to estimate the firms' productivity and their intensity in relationship-specific inputs. After controlling for countries of origin, products and sectors specific effects, the empirical results provide evidence that for the most productive multinationals the likelihood of trading through an independent supplier is higher especially if they use relationship-specific inputs intensively.

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Why Foreign Ownership May Be Good for You*

Cited by 44 publications

References 52 publications

The Organization of Knowledge in Multinational Firms

The Organization of Knowledge in Multinational Firms

Reassessing the foreign ownership wage premium in Germany

Productivity, relationship-specific inputs and the sourcing modes of multinationals

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