|Marin, Dalia and Rousová, Linda (December 2011): The Organization of European Multinationals. Discussion Papers in Economics 2011-20|
Recent literature on international trade has established that the most productive firms become multinationals. But our data reveal a startling variation in productivity levels of foreign affiliates across the countries in Eastern Europe of the same European multinational parent firms suggesting that not all multinationals transplant their home productivity advantage to the new EU Member States and Emerging Europe. One candidate for this startling difference in productivity levels among foreign affiliates is the ability of European multinationals to transport their business model abroad. This paper examines the conditions under which European multinationals give autonomy to their subsidiaries and delegate authority to them. We also analyse the conditions under which European multinationals transplant their business model to Eastern Europe. We collect original and unique matched parent and affiliate data on the internal organization of 660 German and Austrian parent firms and 2200 of their subsidiaries in Eastern Europe including the former Soviet Union. We test the hypothesis that the ability of European multinationals to transplant their business model to foreign affiliates is determined by the organization of European multinationals on the one hand and the market environment their affiliate firms face in Eastern Europe on the other hand. We show that the business culture of parent firms accounts for about 50 percent of the variation of the organization of subsidiaries, while the market environment of subsidiaries contributes the rest.
|Item Type:||Paper (Discussion Paper)|
|Keywords:||International Trade and Organizations, Multinational firm with internal hierarchies, Empirical test of the theory of the firm, Technology transfer to Eastern Europe, Organizational transfer across countries|
Economics > Discussion Papers in Economics
Economics > Chairs > Chair of International Economics
|Subjects:||300 Social sciences > 300 Social sciences, sociology and anthropology|
300 Social sciences > 330 Economics
|JEL Classification:||F, F23, D21, L22, O1|
|Deposited On:||01. Dec 2011 10:33|
|Last Modified:||15. Apr 2014 12:49|
Acemoglu, D., Aghion, P., Lelarge, C., Reenen, J. V., Zilibotti, F., 2007. Technology, Information and the Decentralization of the Firm. Quarterly Journal of Economics 122 (4), 1759-1799.
Antras, P., Helpman, E., 2004. Global Sourcing. Journal of Political Economy 112 (3), 552-580.
Bernard, A. B., Jensen, J. B., Redding, S. J., Schott, P. K., 2007. Firms in International Trade. Journal of Economic Perspectives 21 (3), 105-130.
Bloom, N., Sadun, R., van Reenen, J., 2009. The Organization of Firms across Countries. CEP Discussion Papers dp0937, Centre for Economic Performance, London School of Economics, London.
Bloom, N., Sadun, R., van Reenen, J. M., 2007. Americans Do I.T. Better: US Multinationals and the Productivity Miracle. NBER Working Paper Series w13085, National Bureau of Economic Research, Cambridge, MA.
Bureau van Dijk, 2005. AMADEUS database. Available at http://www.bvdep.com/en/Amadeus.html.
Fernández, R., Fogli, A., 2009. Culture: An Empirical Investigation of Beliefs, Work, and Fertility. American Economic Journal: Macroeconomics 1 (1), 146-177.
Fisman, R., Miguel, E., 2008. Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets. Journal of Political Economy 115 (6), 1020-1048.
Guadalupe, M., Wulf, J., 2008. The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization. NBER Working Papers 14491, National Bureau of Economic Research, Cambridge, MA.
Helpman, E., Melitz, M. J., Yeaple, S. R., 2004. Export versus FDI with Heterogeneous Firms. American Economic Review 94 (1), 300-316.
Marin, D., 2004. A Nation of Poets and Thinkers: Less so with Eastern Enlargement? Austria and Germany. CEPR Discussion Paper 4358, Centre for Economic Policy Research, London.
Marin, D., 2008. The New Corporation in Europe. Bruegel Policy Brief, Bruegel, Brussels.
Marin, D., 2009. The Battle for Talent: Globalization and the Rise of Executive Pay. Working Paper 2009/01, Bruegel, Brussels.
Marin, D., Rousová, L., 2009. The Transfer of Productivity to Eastern Europe: The Role of Organization. Mimeo, University of Munich, Munich.
Marin, D., Verdier, T., 2004. Globalization and the Empowerment of Talent. Discussion Papers 1, SFB/TR 15 Governance and the Eciency of Economic Systems, University of Munich, Munich.
Marin, D., Verdier, T., 2007. Corporate Hierarchies and the Size of Nations: Theory and Evidence. Working Papers 07-14, New York University, Leonard N. Stern School of Business, Department of Economics, New York.
Marin, D., Verdier, T., 2008a. Competing in Organizations: Firm Heterogeneity and International Trade. In: Helpman, E., Marin, D., Verdier, T. (Eds.), The Organization of Firms in a Global Economy. Harvard University Press, pp. 142-172.
Marin, D., Verdier, T., 2008b. Power Inside the Firm and the Market: A General Equilibrium Approach. Journal of the European Economic Association 6 (4), 752-788.
Melitz, M. J., 2003. The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica 71 (6), 1695-1725.
OECD, 2009. Structural Analysis Database (STAN). Available at www.oecd.org/sti/stan.
Rajan, R. G., Wulf, J., 2006. The Flattening Firm: Evidence from Panel Data an the Changing Nature of Corporate Hierarchies. Review of Economics and Statistics 88 (4), 759-773.
UNIDO, 2008. Industrial Statistics Database (INDSTAT 4, Revision 3). Available at http://www.unido.orgindex.php?id=o3533.
World Bank, 2009. World Integrated Trade Solution (WITS). Available at http://wits.worldbank.org.
WVS Organization, 2009. World Value Survey 1995, Waves 1995-1999. Available at http://www.worldvaluessurvey.org.