The Effect of Foreign Acquisitions on Total Factor Productivity: Plant-Level Evidence from U.K. Manufacturing, 1987–1992

Abstract

This paper compares the performance of U.K. plants that were acquired by the foreign-owned sector during 1987-1992 with other comparable subgroups of plants operating at the same time (including plants acquired by U.K.-owned companies). The principal aim is to consider the types of plants that were acquired and whether after acquisition they performed above or below average when compared to other manufacturing plants. The results show that foreign-owned enterprises acquired the most-productive plants previously operated by U.K. enterprises. After acquisition, there is some evidence that productivity declined, which would be consistent with difficulties associated with assimilating these established plants into the new organization.