Kiel Working Papers, Kiel Institute for World Economics
No 1462:
Firm Heterogeneity and Choice of Ownership Structure: An Empirical Analysis of German FDI in India
Holger Görg, Verena Lauber, Birgit Meyer and Peter Nunnenkamp
Abstract: We contribute to the nascent literature on the
heterogeneity of multinational enterprises (MNEs) and the relevance of firm
characteristics for analyzing the determinants of outward foreign direct
investment (FDI). The focus is on the role of firm-level heterogeneity when
MNEs decide on the share of ownership in foreign affiliates. We combine two
firm-specific datasets on German MNEs with varying equity stakes in Indian
affiliates. The impact of firm characteristics on ownership shares is
assessed in the context of OLS and fractional logit models, controlling for
industry and location characteristics. We show that the effect of several
characteristics differs between the establishment of new affiliates by
German MNEs and their engagement in already existing Indian firms. Most
notably, the productivity of the German parents matters only for ownership
shares in new affiliates
Keywords: climate change, financial crises, the world trading system, oil supplies, immigration; (follow links to similar papers)
JEL-Codes: F23,; L25; (follow links to similar papers)
26 pages, November 2008
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