Foreign Ownership, Firm Performance, and the Geography of Civic Capital

Burker, Matthias ; Franco, Chiara ; Minerva, Gaetano Alfredo (2011) Foreign Ownership, Firm Performance, and the Geography of Civic Capital. Bologna: Dipartimento di Scienze economiche DSE, p. 32. DOI 10.6092/unibo/amsacta/4456. In: Quaderni - Working Paper DSE (782). ISSN 2282-6483.
Full text available as:
[img]
Preview
PDF
License: Creative Commons Attribution Non-commercial

Download (735kB) | Preview

Abstract

It is well established in the literature that foreign affiliates are subject to a series of governance and assimilation costs that deteriorate their performance. This is particularly relevant for firms which have been recently acquired by foreign investors. We employ the variation in civic capital across Italian provinces as an exogenous determinant of these governance costs. We derive the testable implication that there should be a clean evidence of a negative effect of foreign ownership on performance in areas where civic capital is low. As the level of local civic capital increases, this reduces the scope for internal transaction costs, and makes the governance of foreign affiliates easier, and their performance better. We take this prediction to the data and find confirmation of our conceptual framework. Our analysis underlines the importance of the geographic heterogeneity of informal institutions when analyzing the effect of foreign ownership on firm performance.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Burker, Matthias
Franco, Chiara
Minerva, Gaetano Alfredo
Keywords
performance of foreign owned firms, social capital, productivity, foreign direct investment
Subjects
ISSN
2282-6483
DOI
Deposit date
26 Jan 2016 09:17
Last modified
26 Jan 2016 09:17
URI

Other metadata

Downloads

Downloads

Staff only: View the document

^