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Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic

Author

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  • Mühlen, Henning
  • Görg, Holger
  • Nunnenkamp, Peter
Abstract
In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and industry characteristics on FDI decisions is assessed by estimating two-step Heckman models. We find that larger, more productive and more experienced firms are more likely to invest in the Czech Republic. Firm characteristics also affect the size of FDI. However, the relevance of firm and industry characteristics differs between the manufacturing and services sectors and depends on whether FDI is horizontal or vertical.

Suggested Citation

  • Mühlen, Henning & Görg, Holger & Nunnenkamp, Peter, 2010. "Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic," Open Access Publications from Kiel Institute for the World Economy 37268, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkie:37268
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    Cited by:

    1. Zouheir El-Sahli & Joakim Gullstrand & Karin Olofsdotter, 2018. "Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data," Applied Economics Letters, Taylor & Francis Journals, vol. 25(17), pages 1222-1225, October.
    2. Daniel Münich & Martin Srholec & Michael Moritz & Johannes Schäffler, 2014. "Mothers and Daughters: Heterogeneity of German Direct Investments in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(1), pages 42-62.
    3. Santos, Eleonora & Khan, Shahed, 2018. "Determinant Factors of Pecuniary Externalities," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 6(8), pages 180-198.
    4. Michael Moritz & Johannes Schaeffler, 2012. "Regional Distribution of German-Czech Multinationals on the Domestic Market," ERSA conference papers ersa12p519, European Regional Science Association.
    5. Michael Moritz & Veronika Hecht & Patricia Noska & Johannes Schaffler, 2020. "Types of FDI and Determinants of Affiliate Size: the Classification Makes the Difference," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 70(4), pages 312-331, October.
    6. Liu, Wan-Hsin & Nunnenkamp, Peter, 2011. "Domestic Repercussions of Different Types of FDI: Firm-Level Evidence for Taiwanese Manufacturing," World Development, Elsevier, vol. 39(5), pages 808-823, May.
    7. Santos, Eleonora, 2017. "Externalities from FDI on domestic firms’ Productivity: A Literature Review for Developed Countries," MPRA Paper 88958, University Library of Munich, Germany.
    8. Fortanier, Fabienne & van Wijk, Jeroen, 2010. "Sustainable tourism industry development in sub-Saharan Africa: Consequences of foreign hotels for local employment," International Business Review, Elsevier, vol. 19(2), pages 191-205, April.

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    More about this item

    Keywords

    multinational enterprises; firm heterogeneity; industry characteristics; sectorspecific FDI; vertical and horizontal FDI;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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