Abstract
The aim of this paper is to investigate whether and how multinational status and foreign ownership affect the survival of Italian manufacturing and service firms. To this end, we analyze firm survival by distinguishing Italian firms as foreign multinationals (FMNEs) domestic multinationals (DMNEs) or domestic non-multinational firms (NMNEs). The empirical analysis is based on the Kaplan-Meier survival estimator and on the Cox proportional hazard model, in which we look for the impact of ownership dummies on firm survival, controlling for several firm and industry specific covariates. Our findings reveal that manufacturing and service firms owned by foreign multinationals are more likely to exit the market than either DMNEs or NMNEs. Moreover, DMNEs show a higher chance of survival in services. By decomposing firm activities into different technological classes, we also find that foreign ownership still exerts a negative influence on firm survival in both static and dynamic industries, while domestic multinationals in less-knowledge-intensive services appear more persistent.
Highlights
A large body of evidence suggests an overall beneficial impact of multinational firms (MNEs) on both home and host countries
We achieve our aims by using an unconditional analysis of survival by the Kaplan-Meyer (KM) survival estimator and turning to a conditional analysis based on the Cox proportional hazard model (CPHM), in which we look for the impact of ownership dummies on firm survival, controlling for several covariates both at firm and industry level that may affect survival
This paper has empirically examined the effects of the presence of MNEs on Italian firm survival, using firm level data for the period 2004–2008
Summary
A large body of evidence suggests an overall beneficial impact of multinational firms (MNEs) on both home and host countries. The issue of whether foreign MNEs are more “footloose” than domestic firms is highly debated in the political as well as in the academic field. A further but less investigated question is whether a more footloose nature can be attributed to domestic MNEs. In this paper we analyse both issues and study the determinants of survival of three categories of firms in Italy: foreign. Ferragina et al Does multinational ownership affect firm survival in Italy?
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