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.
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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
Tipologia del documento
Monografia (Working paper)
Autori
AutoreAffiliazioneORCID
Burker, Matthias
Franco, Chiara
Minerva, Gaetano Alfredo
Parole chiave
performance of foreign owned firms, social capital, productivity, foreign direct investment
Settori scientifico-disciplinari
ISSN
2282-6483
DOI
Data di deposito
26 Gen 2016 09:17
Ultima modifica
26 Gen 2016 09:17
URI

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