Foreign ownership and productivity: new evidence from the service sector and the R&D lab

By Rachel Griffith, Steve Redding, Helen Simpson. 2004

201 citations recorded by the source corpus.

This paper examines the relationship between foreign ownership and productivity, paying particular attention to two issues neglected in the existing literature – the role of multinationals in service sectors and the importance of R&D activity conducted by foreign multinationals. We review existing theoretical and empirical work, which largely focuses on manufacturing, before presenting new evidence using establishment-level data on production, service and R&D activity for the United Kingdom. We find that multinationals play an important role in service sectors and that entry of foreign multinationals by takeover is more prevalent than greenfield investment. We find that British multinationals have lower levels of labour productivity than foreign multinationals, but the difference is less stark in the service sector than in the production sector, and that British multinationals have lower levels of investment and intermediate use per employee. We also find that foreign-owned multinationals conduct a substantial amount of UK R&D. We discuss the implications of these and other findings for the policy debate on incentives to influence multinational firms’ location choices.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/96c9a9e8f816d668ca7fdddc65275ed2ffee6e7d

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Citations in the corpus

Tax Policy for Economic Recovery and Growth (2011, methodology): “Productivity In the analysis of productivity at the industry and firm levels, we follow the empirical approach suggested by Griffith et al. (2004, 2009), who model TFP growth as a function of TFP growth at the technological frontier and the distance of a given firm (or industry) to the frontier, in…”
Exporting and productivity in business services : evidence from the United States (2009, background): “…point that export data on services is not generally available at least from official sources, and until recently there was relatively little interest in or research on productivity in services, although this is now changing (Griffith et al, 2004; Broadberry and Ghosal, 2005; Crespi et al, 2006).”
Does FDI Bring Good Jobs to Host Countries? (2012, background): “A similar conclusion is reached by Girma and Görg (2007), who study food and electronics sectors in the United Kingdom, and Griffith (1999), who considers the British car industry.”
Innovation, ownership and profitability (2009, background): “First, foreign-owned enterprises tend to be more productive (and by implication more profitable) than their indigenous counterparts (Stone and Peck, 1996; Griffith et al., 2004), largely because they are more technologically advanced (Oulton 2001)(1).”
Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany (2008, unknown): “This threshold is suggested and used for statistical purposes by the IMF10, UNCTAD (2005), OECD11; many OECD countries, including Germany12 and is common in the literature (e.g. see Griffith et al. 2004; and Doms and Jensen, 1998).”